A direct listing, and is there really investor demand . But first to our lead. Intel disclosed this week that most of the processes running the World Computers and smartphones have a feature that makes them vulnerable to attacks. As the largest chip maker in the world, the impact is farreaching. Intel says fixes are coming over the next few weeks and it sees no Material Impact to its business. Google, which discovered the flaw, says the issue also affects other Semi Conductor firms. Microsoft, apple, and google said they secured their systems. We found out what we need to know. Google researchers found out that this might be a problem going back to the middle of last year. The idea was hey, we all get together, we all find a fix for this, then we put that fix in place. Then we go and say, look, this is what happened. We sorted it out. Dont worry. Unfortunately, news intervened. People found out. So now they are in this kind of scramble mode, where intel was forced to come out. Not have all of these fixes in place, we do not know the impact they will have on computers. A lot of concerns. Emily are there any legal issues here . Yet, one has said anything but this is the kind of thing that class action lawsuits are designed for. There are regulars that might regulators that might look at this and say, hold on, you have one or two companies where everything depends upon. Why are we giving them so much power, so much influence and the potential to damage . Emily we are talking about almost every computer and smartphone and server out there. Ian that is correct. Emily what are the potential impacts . What does this flaw mean . Ian first, no reports that anyone has exploited this vulnerability yet. Toy have all been careful say that, but you have to say well, if people did not know about it they were not working on it. Now they know about it. That is the important thing here. If you have a computer at home, you have areas on your computers where passwords are stored, where, say Encryption Keys are , stored. In the normal course of events, the programs you are using dont have access to that data. This feature of chips allows , in theory, access to that data for highlevel programs and makes it more vulnerable as a result. Emily intel says they wont have a significant Financial Impact from this. How can that be . Ian in the past, they have had to recall chips or fix patches. This time, they are saying look, this is the future of chips. This makes chips faster. Our chips work as they should. Emily another thing that doesnt look good is that intel found out about this, as you said six months ago. , the ceo sold a chunk of stock later in the year. What happened . Ian this, again, has created a lot of attention. But if you look at the filings, this was a regularly announced plan. I mean, as you know, executives clearly usually set out a plan where they say, in advance, i am going to sell this amount of shares. Deflect counts of them trading on insider information. The timing of this, whether intel really knew this was going to be such a big deal, that is obviously all up in the air and we cant say with any concrete basis that he knew this was coming. Emily bloombergs ian king. And we continued our coverage from the fallout of intels news speaking with brian white. , take a listen. What we are talking about is a feature, speculative execution, that has been in processors for over 10 years, nobody has discovered it until now, and and it is used in intel and other designs. Arm licenses their designs to apple, qualcomm, mediatech, nvidia, everyone is impacted. What i find interesting as i was brought in a couple weeks ago by these companies to get a sense, because they knew what was a big deal. In 20 years as an industry analyst, i have never seen three Companies Come together in a briefing to talk about the issue and how they are addressing it as an industry. To me, that is a very important side of the story that hasnt been told that much. There are a lot of problems, to be absolutely clear, but there are interesting ways the issue is going to be be mitigated. I think we will see more discussions from apple and other people as well. Emily do think they should have told consumers . I think they were going to. I think it showed bob is right. The transparency of the industry is working, working together, it was responsible disclosure, which is important. They found a vulnerability, find informed the manufacturer, working on a patch, and were planning to announce it. We believe it was next week. But somebody leaked information, and now it is public. But one of the biggest takeaways here is that it shows the community is taking security more seriously. They are more responsible. But what is scaring us is this is ubiquitous. If there are issues at this level, where are they are not issues . Emily how serious is this issue in terms of actual impact . Ian mentioned we dont know that anyone is exploiting this flaw, but we dont know a lot of things about attacks happening. It is a fair point. It remains to be seen. There are some variants that are considered worse than others. There are three in particular that allows people to get access to private data, that is the one being talked about a lot. That is what most people are trying to address immediately. I think you are going to see some of these variations play out. But what is interesting is this has been out there forever, and we are seeing this being addressed now. In theory, there are bad things that can happen, but it took 10 years to discover it. That should give you a sense of how hard it is to exploit these. Emily who could exploit this vulnerability and what would they do with this information . I would suggest that those who have significant resources. For example, google has a significant Security Team that would spend the time necessary to find this vulnerability. Such astors, nationstates, may have the capability to know how to actually access and take advantage of this flaw. I also think what is important here is that there are no known attacks ongoing right now. We are still unsure if you can execute this remotely or you need to be on the user machine. So there is a lot we dont know. It i do think, you know, just reinforces two things to me. One, increasingly, the software we are operating is quite secure. The second is that we know that if a determined at the terry adversary wants to gain access to a machine, they are going to gain access. There is no way they are not going to find a way in, and this may be another way they can potentially exploit. Emily what can consumers do . Consumers right now need to update. There will be two types of updates that, out. Cpm,el be soft out. There will be software and hardware updates. It is easy to take down a software update. The hardware update may be difficult, depending on how they push that out. It is going to be straightforward, given the attention this is receiving. I think the manufacturers are all over this and we will be fairly protected. However, what i think is important is that this enforces you need to protect your data and you need to understand who is accessing that data. Just like you do with your own personal data at home do extra , precautionary measures. And make sure only certain people have access. Emily what do you think this foreshadows for the year ahead in cyber . Going tok it is focus a lot of attention. I have seen people write articles that say you know what, as bad as this is, it is going to lead to better things. What you do when you find these weaknesses is you redesign things. You rearchitect software, you rebuild the hardware in order to do that. To address a point you raised, it is very common in the security world for people to tell people about an issue and give them time to fix it. Actually, normally what projects zero does, i was told, is they give people three months. Because this was deep level, they needed more than three months. They were scheduled to do it january 9. Next tuesday was the scheduled date, which was six months past when they got it, because they knew they needed the extra time. So bottom line, we will see more awareness of how this process occurs and sensitivity to what is going on, people having to figure out how they do this. We will have to have better update policies, because it is going to be hard. The firmware stuff can be hard to update. Apple, for example, will probably do it as a combined os and firmware update, but on a pc, you have to do a bio update and os update, and it gets messy. Emily we know companies are cooperating more clearly. We know that the vulnerabilities being discovered are more specific, yet hackers are also Getting Better at their jobs as well. Is anything changing . Are we under any less or more of a threat . First, it is important to keep it in perspective. Understand the threat and understand you are adequately equip. And we need to remember to protect the data. That is were security needs to live. It is not about just protecting the software. It is understanding your data and understanding whoand we neeo protect the data. Interacts with the data. And keep in mind it is a layered approach. It is also basic training. It is all those elements together that are going to , over time, increase our cyber hygiene and make us better. Emily that was ryan white with fourth point and bob ladonna with tech analysis. Barclays analysis Mark Markowitz says apples offer to replace iphone batteries cheaply could mean a big drop in future sales. Moscow its writes that apple he writes that apple may sell up to 16 million fewer iphones this year. The analyst expects some customers to take advantage of the discarded batteries and skip potential upgrades to newer models in 2018. Coming up, tesla pushes back a key Production Target again, raising questions about whether the electric carmaker may need to raise more cash. Later, we hear from the blackberry Ceo John Chen, discussing the companies turnaround plans to tap into the upcoming autonomous driving industry. This is bloomberg. Emily chinabased and Financial Services group has abandoned its plans to merge with moneygram international. This comes after the company failed to win approval from the committee on Foreign Investment in the United States. The National Security panel has recently become more active in blocking chinese investments in american companies. Nt financial offered cash for the dallasbased money gram, valued at 1. 2 billion. Tesla pushed back a Production Target yet again after shipping fewer cars than expected last quarter, shedding more light on elon musks selfprofessed production hell. The Company Expects to hit producing 5000 cars a week, delaying the goal by another three months. Tesla delivered 1350 model threes in the final months of the year, trailing the average estimate of just over 2900 units. We broke down the numbers with chaftin. Why are these numbers so bad . Max they are bad because this is now another delay. Year hek, he said last hopes to hit this 5000 a week goal by the end of the year, then it was three months, now six months. And as bad as these numbers are, tesla has done a good job of managing expectations. If you look at what analysts were saying at the beginning of the week, a lot of people were expecting some disappointment. I mean basically elon musk has , conveyed to investors and the public that he wants to get this right. This is taking a long period of time. Ammunition to skeptics, who are questioning whether tesla will be able to meet these wildly ambitious production goals, whether they happen in the middle of next year or later than that. Emily we have a chart showing production on the bloomberg here. It shows the number of cars produced every quarter. So overall, they are holding about steady, but what do the numbers overall indicate about just how hellish production is . It is just way below what we were expecting. I wouldnt read too much into the production numbers of the model s and model x, the more expensive luxury cars, because a lot of Consumers Want this model three. The massmarket car, plus, tesla has already claimed a pretty big chunk of the luxury car market. The real question is, after you get into the mass market , 35,000, 40,000 current, tesla cange, whether do things the Car Companies have been able to do. Right now, elon musk has done a fantastic job of getting analysts, getting everybody to see this as a bet on the future. But the future gets closer each quarter, and each quarter that tesla isnt able to get this massmarket electric car we have been promised for a decade, the sales pitch is going to get harder, and it is going to continue to cause people to ask questions about the companys future. Emily why is wall street so focused on this when the numbers fourtill so small . Max tesla to justify for tesla to justify this enormous valuation, it needs to be a mainstream car company. It needs to produce these massmarket numbers. Not just a justify the valuation, but to meet the Ambitious Goals that elon musk has set for himself and humanity, as he would put it. If you want to get us off of fossil fuels, you need to get the cost of electric cars down. Goodo it is all well and to sell 100,000, 120,000 luxury suvs, but if you really want to make a dent in the universe, so to speak, then you need to sell these massmarket cars. Emily and still, analysts are saying tesla is way ahead of the competition. Put this into the broader context for us. Max any problem that elon musk and tesla are going through at the moment, his competitors are going to have to go through it. What tesla has said is one of the big problems happening is at the giga factory where they are making these battery packs. You have to assume that any other company that wants to make a massmarket electric car is also going to have to deal with battery production issues. So the bet would sort of be that toyota, gm, whatever will have to go through this as well. The other side of this is these are companies that are experienced in dealing with supply chains, manufacturing big hulkingng pieces pieces of machinery. Tesla has less experience. Maybe they will be will to deal with it faster. That said, tesla has done well as far as getting people to buy electric cars. The model s has outpaced expectations. At least of where they were even one couple years ago. A couple years ago. Emily coming up, blackberry takes to the road with baidu. We will hear from john chen, next. Jeter, we will speak with microsoft about the current role of technology in the administration. This is bloomberg. Emily uggla saved at least 3. 7 billion in taxes in 2017 with google saved at least 3. 7 billion in taxes in 2017 with its structure. It involves shifting revenue to a Dutch Company with no employees, and then on to a bermuda mailbox owned by in ireland registered company. Google is under pressure from regulators around the world for not paying enough in taxes. Blackberry has signed a deal with chinese internet giant baidu to Work Together on driverless car software. The ontariobased companys vehicle operating system and in car Entertainment Software will be bundled into baidus self driving car platform, apollo. Baidu has been signing up dozens of partners around the world in a bid to eventually become a dominant Automotive Software company. We spoke with blackberry Ceo John Chen about the deal. John we have been working with most everybody in the ecosystems, and this is one of the latest announcement of a number of partners we have signed up. You know, we have qualcomm, and others, all in the last four or five months, and this just happened to be the next major partners we signed on. Emily how does this help blackberry push into the self driving car industry . John we are providing, in all cases, we are providing the safety operating systems, safety and security operating systems for the Autonomous Vehicle and the platform. Tothat is how we are going you know, when we first talked about me taking this job, was to really create a new category for us to dominate in. I would not use the word dominate, but i think we are certainly doing extremely well right now in that category. Emily how will blackberry help baidu become a dominant player in the car industry, which is their goal . John baidu, as you pointed out, is quite ambitious in creating the autonomous platform, the Autonomous Vehicle platform. So they are putting together some code and a lot of partnership. They pulled us in as their operating system platform. As again, i pointed out, they picked us because of the safety and Security Certifications that that,e in qnx, and with they should be rather complete in going after the Auto Industry. And i assume the Auto Industry will go beyond just the auto that you and i know of today. They are going to provide maps and Digital Information also. So i think this is a pretty good partnership, and we are bringing some very good things together. Emily talk to us about the impact you see of this partnership on blackberrys business. Give us any hard numbers, if you can. John i cant give you any hard numbers. You know that. I know you have to ask that. It is going to be our growth platform. You should know today that my Growth Business is on the Enterprise Software, especially with security and cybersecurity. The next leg of our growth is with the auto. This is why the design is so important. We are going to go beyond auto into the embedded world. With the auto. We are going to gt world. It is a huge market, and it is growing. We are very fortunate. Emily are there any other partnerships with other automakers in the works, and how do you plan to pursue more partnerships . John you should expect us to continue to expand our ecosystems. Our attention the last two or three years has been winning new design, joining up with new partnerships, creating new platforms, like the one we just and hmi. With dondenso humanmachine interface. All really good, new stuff, some of them a little scifiish. But it is going to happen, and you should expect library continue to grow the Partnership Ecosystem and working with all of them. Emily how does this fit into the context of blackberrys broader turnaround strategy . Tell us what else is working and not working, and how this business evolves, as it has evolved considerably since you have taken it over. John that is a great question. You know, i would not call us in a turnaround mode anymore. We make money. We generate growth in the right area. We have a very good footprint in the cybersecurity enterprise. Our regular industry regulator industry in particular, like the banks. Those are growing. The last quarter, the billings in the Enterprise Software grew 20 . Qnx organization, focusing on design wins. We are announcing really big design wins. I am hoping to see more, and you should expect to see more. When we married the two together in the future, we are going to have a platform of security for iot management. As i said, i am excited about the future of the company. We are executing to it. We are showing results. So it is not just the strategy or piece of paper like the first time you when i spoke. And i spoke. Now we are really delivering. And i am very pleased we are doing that. Emily that was blackberry Ceo John Chen. Coming up, the iranian government is cracking down on social media, as ways of protests grip the country. Ofexplore the evolving role tax for those hitting the streets, next. And as a reminder, all episodes of Bloomberg Technology are now Live Streaming on twitter. Check us out, 5 00 p. M. In new york, 2 00 p. M. In San Francisco. Emily welcome back to the best of Bloomberg Technology. I am emily chang. Antigovernment protests have swept across iran this week. Once again, technology is playing a crucial role. Messaging app telegram, used by roughly half the population ,f iran, and instagram appeared to be blocked in the country. This is not really surprising. Iran has already had a number of social media sites and applications blocked prior to this. For example, facebook and twitter has been blocked in various forms. And they have done this in the past restricted access. Is inwe are hearing now addition to what was normally and previously blocked, there have been additional blocks put on. The ceo of telegram tweeted yesterday that telegram channels have been blocked in an effort to quell protesters, and we are seeing that there have been potential internet shutdowns in various parts of the country as well. Again, none of this is surprising. The iranian government taking on a higher form of censorship now as they are trying to crush any form of dissent. Emily we are calling the use of yearsr, back in the day, ago, which precipitated the blocking of twitter in iran. Talk to us about how protesters are using technology in iran today and how it has evolved from those years. Technology has been critical, obviously now compared to 2009 , you have had had a rise in not just the number of individuals using iphones in mobile devices, and mobile devices, but you have had growth in terms of individuals all over the globe , iran included, using social media and different applications to communicate. In some cases, encrypted applications. This helps them organize, communicate peaceful protest messages coordinate, and spread , ideas in opposition to the government. I think is the technology being critical. It is worth noting that, even though the government in iran is taking steps to quell protesters by blocking their access, the iranians have gotten savvy about workarounds. A lot of them have ways to access these social media platforms, even though the government has prohibited them. Emily we should note that the use of technology has a dark side, including telegram. Telegram has also been reportedly used by terrorists to communicate. Is that correct still . Absolutely. One of the other areas the applications have been used for have not been for peaceful protests, but also by terrorist organizations. This is Something Technology companies have been grappling with. Consistently, over the last year or two as well. Isis and other terrorist organizations using telegram on public and private channels. It is how they communicate, spread their ideology, and spread their propaganda, which is something my organization has been pressuring Tech Companies on in terms of cracking down on content which violates terms of service in the case of terrorism. In the case of iran, much of the protests that have gone on are peaceful protests and demonstrations, things that the obviously United States government is in full support of. I believe the state department has also been using these channels to try to communicate with people and protesters there as well. Emily what has telegram in particular done to combat the use of its platform for terrorists . You are seeing the Tech Companies become a bit more responsive. You saw youtube, part of google, take down some videos recently. Telegram still has a ways to go. In some cases, a lot of these channels are closed. In some cases, there is encrypted communication. Personally, we think that should be enforcing its terms of telegram should be enforcing its terms of service. Any content that violates it should be taken down, not be permitted, and users that are affiliated with terrorist organizations or posting that material should have their accounts suspended. This is something we have seen Tech Companies be more responsive on over the past year after coming under increased pressure, not just from the european union, but from capitol hill, democrats and republicans alike. Particularly in light of the recent hearings on russia propaganda, lots of concerns about nefarious actors using these platforms in ways that are in violation of the terms of service. Emily we talked about this over the years, but what do you expect to come from Tech Companies this year like facebook and twitter when it comes to combating these issues more headon, and what do you hope to see from them . You are going to see a continued buildup of pressure from capitol hill. I think you will see more hearings centered on terrorist use of these platforms and what Tech Companies are and are not doing. I think you will see a push for more regulation in this area. Thats if you dont see the Tech Companies start to take specific show demonstrable progress to get these actors off their platforms. We have a list of individuals that are on sanctions lists. Terrorist individuals on sanctions list. You cant do business with those actors, and if you do, you are in violation of these sanctions policy. In a similar way, our opinion has been they should not have free reign promoting terrorist content to operate in virtual safe havens on platforms. I think you are going to start seeing more public pressure, and i am optimistic you will see Tech Companies being more responsive. I hope it does not take a series of more terrorist attacks and deaths before they do so. Onlineee that radicalization has become a problem in all of the homegrown cases and the cases in europe we have seen. That was terrible or from the counter extremism project. Maller from the counterextremism project. Many companies protested the immigration policy. One of the loudest voices was microsofts chief legal officer, brad smith. We asked smith about the role of technology over the next five years. We are seeing technology have several important impacts. With the advent of Artificial Intelligence, we will see an ongoing impact on not just businesses and government, but also economies and jobs. I think people are bracing for that, but we are still looking to the future without a clear sense yet of what exactly which which jobs exactly will be eliminated, which new jobs will be created, what new skills people will need in order to take these jobs. The other thing to think about is the International Aspects of this. At one level, Information Technology has become more global. The industry has become more global. This is another area where ian has been saying we are seeing the rise of china, chinese tech emergeally as global tech leaders. And at the same time, we are seeing fragmentation in the Technology Sector at the same time. They are not quite as a Global Internet as we conceived a decade ago, and five years from now, we may see more of that fragmentation. Tom part of your charm is you are not in Silicon Valley. You are up in the real world of seattle, washington. I guess that is the real world. Is a pinata for washington. Everyone is going after them. How afraid should San Francisco and the cliche of google or apple, youre good competitors, your good competitors, how afraid should they be of washington in 2018 . Brad most people seem to think seattle is right next door to Silicon Valley or part of it. [laughter] usd i think for all of there is an increasing tension, if you will, between the west coast and east coast. I think we have seen this unfold over the last decade. You certainly see political commentators in washington, d. C. Identify the tech sector as a pinata, as you mentioned. It is not just those on the left. It is those on the left, center. Even those on the right. I dont know that people have yet transferred that concern about technology into a defined course of potential political regulation, but that could come. I think it really behooves us in the tech sector to be listening outhat, and to be addressing the concerns and technology the concerns, which i think Silicon Valley has sometimes been slow to do. Tom lets move to the commonwealth of massachusetts , or maybe the English Common law, and talk to ian bremmer commons. E tech what a great phrase. What does it mean for us . The president of microsoft said, increasingly, what you will see is fragmentation. As we move from the information revolution to data revolution, it is more top down. So the space that is being created, the way people are engaging and the filters they see to engage in commerce or surveillance, those are increasingly either coming from a bunch of fragmented Companies Competing with each other or through the chinese government. Those are two completely different models. And that is not the u. S. Led globalization that we have been thinking about the last 40 years. I think you could make an argument that the facebooks and googles and microsofts are easily as strategically important for the United States, for our economy and National Security, in the next 10 years, as lockheed and raytheon were during the cold war. But i dont think the u. S. Government is prepared to align with these companies that way. Think they have the technological sophistication to understand how to do it. And i also think that some of the Silicon Valley libertarianism is a problem there. And in china, i think that is going to be an incredibly up orton space for brad to be a leader in. Important rats to be a leader in. Space for brad to be a leader in. Francine if you have these transformational changes and how you retrain people and educate people for jobs we dont know of yet, who and how do you educate the governments to be able to give it that retraining . Brad when you look at Government Support or investment in ai one would be hardpressed , to find a government that is more focused or determined than the chinese to make this area a success. You can contrast that what we with what we see in washington, d. C. Were this administrationis d. C. , where this administration is more focused on traditional manufacturing and the socalled digital or new economy. We see an enormous divergence there. When you then get into the area of skills, i think it is a lot harder to find a government that is really out at the forefront yet. In the United States, we see some leadership at the state level, which is not surprising. That is where we would probably expect to see it first. Look at a state like colorado, where governor hickenlooper has been very focused on this the past couple of years, and look at the united kingdom, which has been investing in getting coding into schools. But it is such early days when we think about the impact of ai on jobs, and i do not think any government has formulated a strategy to address it. Francine a lot of people expect a lot of these changes to happen in the next 10 to 15 years. Are we underestimating or overestimating . Will it be sooner or at a later date . Brad there is no doubt that over the next two decades, it is going to be an Artificial Intelligence era. It is going to reshape every sector of the economy, it is probably going to touch virtually every job that exists in the Economy Today in every country in one way or another. Emily that was microsoft president and chief legal officer brad smith on bloomberg surveillance. Coming up, spotify preps for its unconventional public offering. What this means and what it means for startups looking for an exit, ahead. This is bloomberg. Is buyings company ,razilian company 99 taxis putting it in direct competition with uber, and in one of the busiest markets. Last year, the company led an investment in the brazilian company. Terms of the deal were not released. The move is the latest signal that the industry may become dominated by Global Companies instead of local monopolies. Music streaming giant spotify has confidentially filed for an ipo. That is according to a person familiar with the matter. Spotify will go ahead with the plan to skip a traditional stock and list its stock directly. That avoids underwriting fees and restrictions on stock sales by current owners. It will list on the new york stock exchange. We spoke about it with alex barinka and lucas shaw. Spotify has plans to go latec either late 2017 or it really came down to when they 2018, could get their books in order. They felt like they could close their books from an accounting perspective in just a couple weeks. They are comfortable with that. Financially, they have never really needed to go to public just to raise money, which is why they are taking this unconventional path of a direct listing rather than an ipo. They were under pressure to do so as quickly as possible to get out from underneath the terms of this convertible debt they raised from tpg and dragon eer. Emily how is a direct listing different from a typical listing . Alex in a classic ipo, you hire bankers. They got on a roll show, and they try to figure out, with certain terms, what valuation the investors are willing to swallow. This cuts out a lot of that. And that all costs money. They pay the underwriters anywhere from 2. 5 , which is 7 . Snap did, up to with this, it is different. They basically came out and said, look, our stock is trading now. We do not know how the mechanics are going to work, but in the past direct listings i have looked at, these Small Companies that have listed, they basically just open the shares on day one like a normal open auction. And that can inject some questions. Is there enough supply, enough demand, where does the price stand . These are all things they will have to sift through that could inject a lot of volatility into the shares. You might cut out some of the underwriting fees, but if they are going to move ahead with this, they say they dont need to go out and scream their story from the rooftops like a classic ipo, and they dont need 14 banks coming in, telling them how to sell their story. Emily what does this mean for the economics of the early investors . Does it mean more money for everyone in the end who was already an insider . Those investors who choose to sell when they have the opportunity are going to make a killing, if you are to believe recent reports about what the company is valued at, 15 billion, as much as 20 billion. The last time they raise money, in 2015, they were valued at 8 million. While i am sure there will be some complications as to who gets to pull out money when or what the terms are, most of the early investors, should they choose to sell, are in line to make a killing. I do think that avoiding the underwriting fees may be somewhat of a motivation, but the choice to go with a direct listing reflects the company led by a guy who really enjoys doing things differently from how the system tells him he needs to do it. That is a big motivation here. Emily the question is is it the right strategy, and is there a precedent to this, alex . How has it played out . Alex the direct listing precedent isnt there for a big company. It does make me think back to google. It was a different kind of ipo. They had to cut the price down, cut the number of shares. And they came out a year later and sold 4 billion worth of stock. There were some questions about dilution then. So there is a precedent for doing things differently. This will be the first real test case. When i talked to my sources in street who are in in the street who are in the ipo world, nobody has really come out and said i want to do this next. Everyone is going to watch this very carefully, especially the Biggest Companies who dont need the capital raised from an ipo, this might be something that is considered. But it is a big if right now. Emily we know the valuation is high, but what do we know about spotifys financial situation and engagement situation as compared to apple music . Spotifys revenue has been growing rapidly, along with its user base. The arrival of apple and some other competitors, if anything, helped spotify. It made more people aware of the fact that there were these services where you could stream millions of songs on demand. Spotify now has more than 60 million paying customers, more than 140 million users, and its margins have improved. It has negotiated new deals with all major rights holders, record labels, publishers. That gave it slightly better terms, and most of the people who have pored over different filings they issued say that picture looks better and better. They have real cash flow, which a lot of startups dont. Emily quickly, talk to us about the implications of this lawsuit that we just learned about. There are a lot of songwriters who are upset with spotify, because they feel like they never had their work licensed or not getting paid enough. Spotify thought it settled this case last year, but some other filed suit have recently, asking for more. They have asked for more than they are likely to get, but this is a headache spotify would like to do away with before it goes public. Emily that was entertainment reporter lucas shaw and ipo reporter alex barinka. Coming up, we previewed the worlds biggest gadget show. Why top Tech Companies are returning to the showroom floors after several years of low attendance. And if you like bloomberg news, check us out on the radio. You can now listen on the Bloomberg Radio app. This is bloomberg. Emily lyft is set to show off a fully automated Ridesharing Service next week. They are partnering with a Self Driving Software company when delphi split into two companies. Lyft and uber are betting driverless vehicles will be a Pivotal Point to their business prospects. Last year, lyft announced plans to allow self million to self driving developers to plug into their models. And staying with ces, google is setting up a booth for the first time in years. Executives will be roaming the showrooms. We caught up with mark bergen for all the details. We expect more of last year, which was home speakers and alexa were the big part of the show in las vegas. Now there are a lot more competitors. Google is pushing out its own version of a home speaker, apple is working on one. Samsung and a slew of Chinese Companies are there. What we are seeing this year is a lot of the major Tech Companies, both here and in china, are working on Artificial Intelligence and features where you have software combining with hardware. Emily what is googles interest here specifically . Google invested a lot in hardware this year. Htc, they have their pixel line. Google wants to make sure they dont see the living room and a lot of the home spaces to competitors like amazon, apple, facebook. Google is aware the future is moving to a world in which we are using devices beyond phones, talking to our devices. They have a big lead on the software. You want to make sure they are still involved in everyones life. Emily my question was going to be, does it seem like anyone is in the lead when it comes to the living room . We know that amazon got a head start with echo. And obviously apple is coming to market with soon. One the market is still pretty young. Amazon has a big lead with developers, which is key. They are having a lot more helpers build software and apps for the at developers build software and apps for the echo. That is still pretty premature. I think this is a chance that google, apple, companies coming out of china, they can make a market. Emily when we say executives will be roaming the showroom, what does that mean . And a lot of conferences,of apple executives dont even wear name tags. This will become much more of a priority for companies. They are looking for better suppliers. My colleague wrote a good story about this. Down the supply chain, you need a specialized chip, a lot more hardware to keep up with expansion in software. This is where the show is major for Car Companies. It is the same week as the detroit auto show, and the epicenter is gravitating towards Silicon Valley and las vegas. A lot of Car Companies are looking at the future of electronics and autonomy, and will be prowling the showroom floor for the same reason. Emily i do want to ask you about eric schmidt stepping down as the executive chairman of alphabet. He is still on the board, but there are a lot of questions about why this is happening out. Now, and it was kind of abrupt. Is there something bigger at play . I dont know about something bigger. Eric kind of stepped down from a larger role. He was the ambassador, secretary of state of google for years. The google ceo has become much more of a public face. Tied to the was hillary campaign, so his standing in d. C. Since the election has fallen a little bit. You have the general counsel, Government Affairs team. They got there. But google does not have a Global Policy chief. They have an interim person right now. So it is unclear if they are thinking about evaluating their larger strategy in d. C. , and globally in politics. That was Bloomberg Technologys mark bergen. Be sure to tune in to our coverage of the worlds biggest gadget show, including our sonys ceo on tuesday. That does it for this edition of the best of Bloomberg Technology. Tune in each day, 5 00 p. M. In new york, 2 00 p. M. In San Francisco. All episodes are Live Streaming on twitter. You can check us out on weekends on technology. That is all for now. 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. 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