Transcripts For BLOOMBERG Best Of Bloomberg Technology 20180114

First, to our lead. The continued fallout over the microchip security flaw affecting nearly all of the worlds devices. This week, microsoft said fixes for the vulnerabilities may significantly slow down servers and personal computers. In a blog post on tuesday, the company suggested they could be more substantial than intel previously indicated. Microsoft is also temporarily suspending some updates to windows operating systems that use chips that are freezing or not putting up from amd as a result of the fix. Monday night at ces, the intel ceo tried to reassure people that their data would be safe. The security is job number one for intel and the industry. So the primary focus of our decisions and discussions have been to keep our customers data safe. As of now, we have not received any information that these exploits have been used to obtain customer data. Emily we broke it down with ian king, who covers the chip industry. Ian to start off with, intel was very much, we are all in this together, everything will be fine, nothing to see here, move along. Now we just heard from brian krzanich, admitting that maybe things are a little worse than we kind of said there they were. And then microsoft coming out, saying, we are finding problems. So really, this industrywide effort to put a brave face on it and say there was no problem appears to be fragmenting. Emily so what exactly is microsoft saying here . Ian that in certain circumstances, particularly in servers, it appears as though the slowdowns as a result of these remedies are being put in place are worse than had been previously thought. Emily so talk about what exactly this means. Because if the fix doesnt work, then what . Ian its a choice, right . You fix it and your computer doesnt work like it should, or you dont fix it, and you are vulnerable, right . So, you buy more servers to make up for their performance, you struggle by with the corporate system that doesnt work . There are all these ugly alternatives. Emily we also have an update from arm. They are saying 5 of their chips are affected. Luckily it is not 100 . So, what does that mean . Ian this is important. Arm is in every smartphone. Right . You iphone, your android phone, whatever. Many more chips based on Arm Technology rather than intel technology. They are saying since 1991, 120 billion chips using our technology are out there, only about 5 are vulnerable to one of these potential exploits. They are really saying it isnt a huge deal. Emily so, we have headlines crossing the terminal about senators urging the sec and the department of justice to investigate brian krzanichs share sale. We talked about this last week. You mentioned it was a planned share sale, but he is down to the minimum of his holdings. Do you expect more to happen here . Ian as we discussed at the time, intels stance is this has been in place for a long time, this is why companies do this, however, this problem was known to intel before the plan was put in place. People are looking at this and saying, hold on, maybe this kind of a regular plan, the excuse executives always use to ensure themselves against this accusation, maybe that doesnt stand up in this case. That is what has led to senators putting pressure on the fcc to have a look at it. The sec to have a look at it. Emily we also have a headline crossing, saying, they dont expose any exploitable vulnerability related to intel, related to either issue. What does this mean . Ian they are just adding to a list of companies that said, look, no problem here. The most prominent among them is probably google. We have patched, everything is ok. There is no slow down. So we are really getting conflicting information here, and what we have to find out and what we are working on is finding out what really is the truth here, and the part is a lot of people dont actually know yet. Emily whats next . What are they waiting for . Ian we need to see these patches deployed, we need to see what Material Impact it will have. We will see intel report earnings later this month. We will see how it impacts it. Maybe people dont buy their chips, maybe people need more of their chips. Emily as a consumer, should you download the patch or not . Ian this has been one of the consistent messages. If you are an average pc user, if you have a fairly modern system, one you have bought in the last couple years, you dont have anything to worry about. Download the patch and you will be safe. Emily that was bloombergs ian king. One Company Feeling the heat from the chip flaw, arm holdings, which is at the heart of most major mobile phone components. 5 of chips made using this design are vulnerable to the potential hardware hack known as specter. We spoke with arm holdings ceo simon segars in las vegas, and asked how concerned consumers should be about these issues . Simon it is a very serious issue, but it is one the industry as a whole is taking seriously, one we are taking seriously. We are thinking about our future designs and how to mitigate against issues such as this. We are working closely with partners to make sure the Software Mitigations we have developed over a series of months are distributed, that people are using them, installing them correctly, that we can provide the maximum safety to any user of our electronic systems. Emily how long before remedies are fully in place . Simon well, i think it will depend on which system, which type of device you are talking about. For some, it is relatively straightforward to update devices, but in other cases, there is a vast number of Companies Involved in the supply chain to get products to market, so it may take some time. It is really going to be casebycase, and up to the individual oems of the products, who need to take on the software and getting pushed out. Get it pushed out to their customers. Exactly how long that will take, its hard to say, but everybody is on this with a huge sense of urgency. Emily android updates are pushed much more haphazardly than apple, which means some older phones might be left stranded. How much of a concern is that . Do you feel android is more at risk . Simon well, one of the things about some of those older devices is they contain less sophisticated processors, which are much less susceptible to the Security Issues we are seeing here. There are a vast number of Android Devices using cpus from arm, which are not susceptible at all to the security issue. Its not an over characterization to say that every phone every issued is at risk here. That is not the case. Emily when it comes to the actual hardware, is there a fundamental way for you to redo your chip architecture to avoid this . Simon the hardware features can dictate how much risk there is. So Going Forward, for anything that is easy to work around, we are going to do anything that is easy to work around. Some of the more sophisticated features, it is about the combination of hardware and software that determines if there is a risk introduced or not. I think what you are going to see Going Forward is tighter guidelines on how to write software to use microprocessors in a safe way. I think what this episode has shown is that we are in a new world of security, and security risks are changing all the time, and the definition of what safe looks like has changed. We have had a fundamental rethink of it. Emily im curious how much of a wakeup call this has been for you . Has it raised any concern that the chip industry is too concentrated . Simon i mean, in terms of a wakeup call, security is something we take very, very seriously. We always have. We have been looking at the deployments of arm processors in safety critical systems, in security critical systems, for many, many years. So, we have always been looking at and thinking about how might a hacker get it into a system . Trying to stay two steps ahead of how bad actors will try and exploit the system, try to learn as much as we can from the research that goes on in a very broad way. On one level, this is another case of a security tool that has been uncovered. It is different because it is much more hardware fundamental than others in the past, and many Security Issues that you see talked about are down to software and the way that software is written. So it is a little bit different. I think one thing to take away from this whole incident is the way the industry has come together and collaborated in a really positive way. The issues around competition have been put aside as Industries Work together to try to mitigate these issues. That is a positive thing, because there are going to be new issues in the future, and the Industry Needs to react in the same way and work in a positive way together. Emily but do you think the way that the industry has consolidated so much over the last several years could actually be a negative, especially when considering just how widespread this flaw is . Simon i guess theres two ways of looking at it. You can say theres a lot of consolidation and a relatively small number of points of failure. On the other hand, with the relatively small number of parties involved, it is much easier to coordinate a response. One of the reasons we are seeing time taken to get all the software pushed out is because of the complexity is because of the diversity of the manufacturers involved. Emily that was arm holdings ceo simon segars. Well, apple is facing a french criminal probe on whether the company deliberately slowed battery performance on older iphones. This follows allegations from consumer groups. A preliminary investigation began against the company last for programmed obsolescence and deceit. And here in the u. S. , a member of congress is also speaking out. Republican senator john thume wrote a letter asking about how apple is handling customer complaints. Into a Bloomberg Television interview, john thume was disappointed with apples responsible far. Sen. Thume we dont think they have been sufficiently transparent with the american people. There are a lot of customers and consumers who have noticed the changes in some of these apple devices, and the fact that they would have those devices degraded in terms of their capabilities without them knowing why, i think is what we are trying to get at. Emily and more news for apple this week, an activist investor and the california state teachers retirement system are urging apple to create ways for parents to restrict childrens access to their mobile phone. The shareholders want the company to study the effects of heavy usage of mental health. They fear the mesmerizing qualities of the iphone could put fost could foster a Public Health crisis. Coming up, carlos ghosn joins us next to talk about the future of automotives, from ridesharing to electric cars. And if you like bloomberg news, check us out on the radio. You can listen to us on the Bloomberg Radio app, bloomberg. Com, and on sirius xm. This is bloomberg. Emily more news out of the Consumer Electronics show in las vegas this week. Amazons Alexa Service will be available in certain toyota and lexus cars sometime this year. The voiceactivated Virtual Assistant will let drivers and passengers get directions, control entertainment features, and perform other functions in the car via voice command. Also at ces, mitsubishi announced a new Venture Capital fund with plans to invest 1 billion over the next five years. The chairman and ceo joined us from the event in las vegas to talk about the fund. Take a listen. Carlos you know, we have so many things to do for the next six years, which is about the transformation of the car. And i dont think we can do it alone. I think we will need a lot of innovation and creativity coming from startups, or support coming from partners, and we think the way we are organized today is not sufficient. That is why we came with a new organization, which is a corporate Venture Capital who will invest up to 200 million a year, which adds up to more than 1 billion, in order to support our efforts, transforming the car into electric, autonomous, and connected product. Emily vc investing just hit the highest level since the dot com boom. 84 billion deployed into startups last year. How much competition is there to develop and deploy the kind of technology that you are trying to develop . Carlos oh, theres a lot of technology out there. I can see it. I am receiving a lot of people, and hearing a lot of ideas. We have to be very careful, because it means that there are a lot of interesting ideas, but how many of them are going to survive, be able to be really implemented, executed, at a reasonable price consumers are willing to pay . This is where the challenge is. Now, when we are talking about 1 billion over the midterm plan, lets not forget that the alliance will be investing 60 billion 50 billion. So 1 billion over 50 billion is about 2 of our export. Emily so will you really be reading people brains, and using that to help them drive their cars . Carlos well, this is, i think, an illustration about the fact that this is not only about autonomous driving, which means that the driver can drive whenever he wants, but also the car will have the driver be an effective driver. That is what we call enhanced driving. So what we want is on top of the autonomous driving and what we call enhanced driving experience, the car has the driver be a better driver, be much safer, and optimize the driving experience. That is what they are talking about. So when do you think we will have fully Autonomous Cars on the road, and when will people use them . Carlos i think it is going to be down the road, within the next four years. I am talking about massmarketing here. I am not talking about having prototypes ready to use because we are we have prototypes already have prototypes working very well. It may take three to four years before the regulations allow this to be massmarketed, before we make sure the system is totally robust in any condition. So, i would say 2021, 2022. Emily wow, that soon . So how do you see u. S. Tax reform impacting auto demand . Do you think there will be a shift toward the luxury segment . Carlos i think this should obviously support activity and spending and consumption, which means that i think this is going to be good for the Auto Industry in general. And the fact particularly that the support and incentives for zero emissions cars have been maintained, it is also very good news for electric cars. I am seeing it really positively as a business person. Emily what are you hearing out of nafta negotiations . Do you think there could be a deal that wont raise the price of cars significantly . Carlos you know, it is very difficult to predict. I think in this field, we have to be prudent, watch carefully whats going on, try as much as possible to give the different policy makers data and facts in order to make the best decision for their own company, from the United States and mexico. That is what carmakers can do, make sure the revision of the policy is in the best interest. Emily businessweek once wrote a story that if the president were a person, it would be carlos ghosn. It was announced that the president will be attending davos. What do you think of the president attending this global event, preaching America First . Carlos i think it is going to be extremely interesting. Davos is the place where many people meet to discuss important subjects that matter for countries and that matter for people. And the more people participate, particularly people with highpowered levels, the more interesting it is, and the more it gives meaning to davos. So i welcome this opportunity. Emily carlos ghosn. And still ahead, sony has had some big moment at the box big moments at the box office this year thanks to smashes like spiderman and jumanji. But the ceo says the company isnt stopping there. He joins us later this hour. This is bloomberg. Emily china has entered the top five in u. S. Patents for the first time ever. Chinese inventors received 11,241 u. S. Patents last year, a 28 increase over the same period in 2016, this according to a report by ifi claims patent service. China ranks behind the u. S. , japan, korea, and germany overall. And gopros challenges are coming to a head. The company missed its fourthquarter sales guidance, signaling that revamped cameras and price increases arent sparking revenue growth. Shares tumbled on the news, leading to its worst performance in a year. M a is the likely next up for step for the struggling camera maker, but the gopro Ceo Nick Woodman spoke to bloombergs selina wang and denied reports that they have hired jpmorgan for a potential sale. Take a listen. Nick jpmorgan is, in fact, our banker, but we have not engaged them to help us sell the company. And you know, with that said, if there were an opportunity for gopro to partner up with a Larger Organization that could help us scale, the companys brand,company, scale our scale our reach, that is something we would consider, but it is not something we are actively engaged in at the moment. Selina do you think you will want to actively engage in this . Is there some catalyst you see coming . Have any potential suitors reached out . Nick well, i will answer the question in so far as, would we engage in Something Like this . This is something we explore from time to time, as it is our job to grow the business in the most strategic way possible, and that is definitely one way to do it. So it is not a new topic at gopro, but i cannot share any more information than that. Selina nick, can you talk a little bit about organizations that you would love to work with, if theoretically something did work out in terms of a sale or a partnership . I can think of any number of Consumer Electronics Company Companies that gopro could fit well into. How are you thinking about it . Nick well, i am not going to go into too much detail, but i would say that being a company that is enabling people to capture and share themselves in exciting ways, gopro is a really social company. And we have one of the strongest brands in the world that is very well regarded for our ability to help people capture and share their active lifestyles. And so, we are primarily focused on spreading our brand, and spreading our hardware and Software Solutions to reach as many consumers as possible. So to us, scale is very important. Selina shifting gears to todays announcement, it seems like gopro is steadily continuing to narrow its vision. Last year the entertainment unit shutdown, now the drone business is closing. So how should we understand the product roadmap and Revenue Diversification of gopro . Nick i think what you are seeing from us is that we are listening to our customers more and more. We are investing in development of products and solutions that our customers want from us. Whereas in the past, im even on record as having said in the past, that one of the things that makes gopro strong is that we are our customer, and in the past, we developed products we really wanted, and that seemed to resonate well with the market. That we are in the business to build products for our customers, and we need to identify what they want and go and invent for them. That can be difficult, because as you are inventing new be it hardware or software, because the consumer doesnt know what they want. But it is our job to read the data, understand the trends, and build for our customers. Our customers love the entertainment gopro enables through the content we produce today and the content that our customers produce, but they didnt need us to become a whole blown entertainment business. Our customers have told us they really love buying our cameras from us, and while a passionate number of them wanted to buy drones from us, the majority of our customers want to buy gopros but connect to a great appexperience, experience, and that is what we are investing in moving forward. Selina nick, there have been several rounds of layoffs over the past year, and with this most recent reduction, there are fewer than 1000 employees. Should we expect to see further reductions to reach that target level of operating expenses . Nick no. Opexecent reductions, which involved headcount reductions, get us to the necessary sub 400 million opex level that will allow gopro to be profitable in the second half of 2018, and we are seeing really good sales for our products. So as long as sales trends continue as forecasted, we feel like we will be in good shape. Emily that was gopro Ceo Nick Woodman speaking with selina wang. Coming up, as a longtime netflix executive, she pushed forward the thinking that employees are adults and deserve freedom. And somehow, it worked. We talk with patty mccord, next. And a reminder, all episodes of Bloomberg Technology are Live Streaming on twitter. You can check us out at technology on weekdays 5 00 p. M. , in new york, 2 00 p. M. In san francisco. This is bloomberg. Emily welcome back to the best of Bloomberg Technology, im emily chang. During her 14 year tenure at netflix, patty mccord helped to define the modern workplace. There, she was one of the authors of the nowfamous 124page missive called netflix culture freedom and responsibility that has been viewed 15 million times. But as we all know, Silicon Valley has not always been the pictureperfect image of maturity. Patty mccord just published a new book this week and joined us from new york. Patty we didnt just assume that we would have a great culture that would stick around and be the same forever. We realized that we could innovate and of all the culture at the same time we were innovating and evolving the product itself. Emily in some cases, having the right roles when it comes rules when it comes to netflix means having no rules, like unlimited vacation, which is the policy there. Do you think it is more about hiring the right people or creating the right structure . Patty it is absolutely both. If you create a structure that s you need people who have who like a lot of responsibility, they like to have a lot of judgment in their work, they want to make their own decisions, you have to hire the people that like to do that. And it is not everybody. I wrote my book not as a memoir about what we did at netflix, i wrote my book because i think some of the principles we applied apply to everybody at work today, and we can all think about work differently Going Forward. Emily looking at Silicon Valley specifically, we have seen many examples where this industry has brilliant jerks, or so they are called. Look at former uber ceo travis kalanick. When you look at that situation, obviously, he helped build a 70 billion company, but what went wrong . Patty i think people get enamored in their own success. A lot of these companies received lots of money, and it was a growth at all cost scenario. And so, when you grow fast and you are rewarded for doing that, then you assume that you are doing it right. So, these things happen when things are going extraordinarily well, and you know, we had a bit of a different circumstance at netflix because at the time we started coming up, we didnt have a lot of money, and we didnt have a lot of freedom to be able to go outside of the boundaries because we had a lot of work to do. So sometimes i think it happens because you are kind of overcompensated. You have so many people doing so many things that you stop paying attention to good discipline and good efficiency. Emily now, part of the problem is that this idea of the young, brash founder, or engineer, or product guy is a stereotype that people buy into, whether it is investors who fund them or companies that hire them. How problematic is this idea, that is what is ideal . Patty i think it is problematic across a lot of industries. I consult now to small startups and large corporations, and i talked to people around the world, and i see it over and over again. Some of it is human nature. You know, when you are successful, you can, i want to surround myself with other successful people, and i want them to be smart, articulate, and fast on their feet. I want them to be, well, just like me. Right . So like hires like hires like hires like. But what is really interesting, i got interviewed earlier in the week, and the woman was asking me about how interesting it is that so many of these men who were fired for Sexual Harassment charges are being replaced by women. We were talking about hoda in specific. I said, isnt it funny . I hear in the Silicon Valley all the time that the reason we cant have women in management positions is it is a pipeline issue. There are not enough qualified women to take the jobs. In each of these cases, the women are already in the room. She was sitting right next to him, matt lauer, at his desk. So i dont think we really have to look that far to find really qualified, capable women in our workforce. Emily amen to that. Patty yeah. Emily i want to ask you about another Silicon Valley issue, which is that a lot of companies here from facebook to google provide these amazing perks, meals around the clock, transportation services, gym services, you can bring your pet to work, you can get a haircut at work. Netflix, on the other hand, as i understand it, were fairly light on these kinds of perks and encouraged people to go home when you are done with your work. Do you see anything problematic about this sort of campus mentality . Patty ive got to tell you, it is pretty sweet here at bloomberg in new york. [laughter] emily we do have some fancy stuff. You do have some fancy stuff here. Emily i dont get to bring my dog to work, but other than that. Patty you know, i think anything can go overboard. I worked in the Silicon Valley for over 30 years, and i have seen the pendulum swing more than once. And so, you know, the problem for me with too many perks and taking care of people from everything from their laundry to their transportation, you have to figure out what things makes the company efficient and effective and what things treat people like children. And so, you know, i understand the tradeoff people make. I understand the transportation issue in the bay area, and we dont have the infrastructure that you have here in new york, for example, to get people around. But you know, some of it seems silly to me. And it might be just because ive seen the rich times and the poor times. I want to link what we do and how we treat people to our successes as businesses, and to the delight that can we give our customers and our clients. And if you focus on that, then you rethink some of that stuff. And that correlation that people assume that if i make employees extraordinarily happy, they will be extraordinarily successful, im not sure i really buy that. Emily patty mccord, author of powerful building a culture of freedom and responsibility. Most companies dont expect police to regularly raid their offices, but uber isnt most companies. This week, we learned in order to foil raids, they developed a secret tool they call ripley. That tool allows uber to lock down equipment in foreign offices to thwart police raids, according to people with knowledge of this system. Uber routinely used ripley from spring 2015 to late 2016. Coming up, our conversation with turner ceo john martin. What he has to say about the potential at t time warner merger, next. And also from ces, we ask the sony ceo if the entertainment giant plans to sell its tv or movie studios. This is bloomberg. For now, this strategy is, as i said before, shore up are more to show off our Motion Picture business, and make sure any of the deals we make concern the future, that we are in the drivers seat, and not in a situation where we have to give up control of the assets we have grown over the years. Emily huaweis u. S. Expansion plans had a serious bump in the road. The chinese smartphone maker and at t deal fell through what people say is political pressure. Huawei had been set to launch their new Flagship Smartphone with at t in february. At ts cancellation comes weeks after the u. S. Senate and house intelligence committees reportedly sent letters to the fcc, arguing that huawei was a security threat. And it is pretty bad timing for huawei. The company showed off their new smartphone at ces earlier this week. And now, we head back to the Consumer Electronics show in las vegas. While there, we caught up with sony ceo kazuo hirai. He told us that sony wants to be a buyer in media consolidation, so naturally, we asked just to they might be targeting. Just who they might be targeting. Take a listen. The strategy right now is to really make sure we really have a very strong operation, first and foremost, before we start looking at options. As these assessments come up, we will enter into them, but the idea is to make sure first priorities are to make sure we shore up our own studio. Emily so, lets talk about the broader strategy then. With that involve better ip, better distribution, better tieups in asia, a focus on more niche movies, for example . Kazuo i think you hit some great points. I think the first thing we really need to do is look at the ip library we have, spiderman being one of the greatest ids. We have a lot of other ips, jumanji, for example, and make sure that we go back into our library and take advantage of the ip libraries that we have. I think that there is also a lot of potential for tapping into our video games ip, the first Party Software we have, and Sony Interactive entertainment. Those discussions are ongoing as well. And it is also making sure that we have the right kind of financing, Financial Arrangements as we go into Motion Picture production, to make sure that we have the appropriate producer fees and make sure that we also control production costs, which is another area we need to focus on a lot more. Emily now, you guys are a stakeholder in spotify. Im curious, what do you think of their plan to list directly, and does sony have any intention of selling shares . Kazuo at this point, we have not made any determinations in that regard, and obviously, it is spotifys decision to go into the public market. And i think that over time, it will give them more ability to really grow their business Going Forward and make more investments. Emily the music landscape is shifting dramatically. Im curious what your thoughts are and what your expectations are for a music services, and how that will impact the record industry at large . Kazuo i think with youtube, spotify, any of the other Online Services that we have deals with both on the recording music side as well is the publishing side, it is really going to make sure that the music industry, recording music industries, continue to grow. And that we give artists more opportunities to really get their music out to the consumers through these services. So, i actually think the music business is a very important Inflection Point toward further growth, and we were talking about the decline in physical distribution, but with streaming and all mine services that are coming Online Services that are coming online, i think it is a great time to be in the music business. Emily sony atv recently made a deal with facebook. What is the motivation for that deal, and what do you think facebooks intentions in music are . Kazuo i think that with other online players, they are also looking to make music a part of their service that they provide for the customers. I think it is a very Competitive Edge that a lot of the other providers have because music is such an integral part to everything that we do and in terms of how we enjoy content. Emily so, looking out through 2018, what do you think is the biggest risk to Economic Growth this year . Kazuo you know, i think that from a sony perspective, we want to make sure that whether it is multilateral, bilateral discussions that happen between countries and territories, that there is a free flow of content, product, also data as well as people. Every time there is an issue or some hindrance to stop that free flow, that will impact our business in a negative way. So i just want to make sure that in these discussions free trade , of various goods and services is at the forefront of everything we talk about. Emily so sony ceos traditionally have about a sixyear tenure. You are coming into your sixth year this year. Curious what your own plans are and what your intentions are for this year . Kazuo you know, i serve at the pleasure of the board and the shareholders. As you know, we are just completing our second, threeyear mid range planning session, and going into our third as of april. So, we need to make sure that we plan and execute accordingly. Emily that was our interview with the sony ceo, kazuo hirai. While there, we also caught up with turner ceo john martin and asked about at ts possible merger with time warner, and whether he has spoken with the at T Entertainment folks about what the priorities would be if the deal gets done. Take a listen. John i think the benefits of turner, and more broadly speaking, time warner connecting within at t, is right now premium content companies are racing. We are trying to pick up more scale technology, more data, more ability to reach our fans, and know who our fans are, and at ts data, their scale tech platform, i think it will enable us to have significant Advertising Opportunities that we it is just going to supercharge the strategy turner has been on. In addition, at t, directv subscribers and its tens of tens of millions of mobile customer relationships are going to provide us new and innovative ways to get our content and such as, maybe the boomerang, for example, consumers. Mobile because i believe the next five to 10 years, the fastest growth in video consumption will be through mobile. So those will be the priorities, drive advertising, make it addressable, find out who our fans are, and reach more and more people over more and more devices. Emily there are major regulatory challenges, however. What role do you think president trumps disdain for cnn played in the dojs review of the deal . John i really have no idea. I cant possibly speculate. It would be inappropriate for me to speculate. Fortunately for me, i am focused on running turner, and we have got teams of incredibly capable people who are working really , really diligently and hard to make sure that the deal closes, and we fully expect that it will. We are planning for that day to happen, and we cannot wait to get going. Emily fox news and msnbc have made gains on cnn, largely driven by sean hannity and rachel maddow. What can cnn do to buck that trend, and do you think the moderate model, if you will, is sustainable . John well, i think cnns model is sustainable. If you look across the three networks you just mentioned, all their ratings are up. Cable news ratings in 2017 were the highest they had been in years. And yes, depending on the particular climate, and depending on what the particular subject matter is, you know, it might be possible that msnbc does a little bit better, or it might be possible that fox news does better. But i will tell you, cnn completed its best year in 2017 ever. A record year. It has been the top 10 adsupported Cable Network for 40 years in a row. Five quarters in a row, something it has not been able to do in 22 years. So the cnn Business Model has never been stronger. And frankly, i dont think there has never been a more important time for cnns place as it relates to journalistic integrity and what it means not only to the country, but the world. I am incredibly proud of what jeff zucker is doing with leadership there and what our journalists are doing every day. And we have no plans on changing, trying to be the best journalistic organization in the world. Emily at t has talked about slicing up shows, making them more adaptable for a mobile audience. Is that something you would consider doing . John absolutely. I think it is something we would do with or without at t. I think the ability to break down traditional, longform formats to shorter shows, making them available on mobile devices, and frankly, maybe changing the windowing of our shows and making them available on alternative devices before they even show up on linear tv. I think all of this would be ways that we with our big brands and our notable brands and our fans, we have to stay connected and engage with our fan base, and we will be experimenting with a lot of different ways to do that. Emily that was turner ceo john martin. Coming up, the crypto craze in 2017 seems to have died down due to regulation concerns. What to expect from Digital Currencies in the new year, next. This is bloomberg. Emily dropbox is said to have filed confidentially for an ipo in the United States, and to a dutch according to people familiar with the matter, Goldman Sachs and jpmorgan will lead the listing, privately valued at 10 billion. Dropbox offers filesharing and Cloud Storage services. While the sec is cracking down on a Hong Kongbased company that benefited from 2017s cryptocurrency fever to the tune of a 900 stock surge. The sec is suspending trading in shares of ubi blockchain due to unexplained market activity. The company, lacking in revenues and even a marketable product, reached a 3 billion market cap before concerns about executives history were raised in a story by bloomberg news. We were joined by the managing partner of Hong Kongbased ca connecticut capital, who started investing in bitcoin in 2013 when it saw its first major rally, and since started a Venture Capital firm investing in blockchain technology. Also joining us from new york, the author of the story, our editor at large, cory johnson. This is really indicative of how the entire market is reacting to the phenomenon of bitcoin and blockchain and cryptocurrency trading. And i think it is important to note out if this story that the out of this story that the sec did step in, and i think it is a good thing they did, to investigate. There has been no necessarily sign sign of wrongdoing, but they are adding guideposts, they are adding some investigation, they are adding some type of structure to the market to try to grow it in a more safe and i think sustainable way. Now as far as ubi, they are doing what they are doing. Maybe they are related to blockchain, maybe they are not. I have no idea. But i think what we are seeing in 2018 is really the year of bitcoin and cryptocurrency trading becoming a social phenomenon. Emily what does that mean . I was in new york in line at a bagel shop, eating noodles, and everybody was talking about trading cryptocurrency. Emily but does that mean it has inherent value is the question . No. Trading does not mean inherent value, but what it does mean is it has a massive onslaught of attention. And these attention economies that turn into Actual Development and add support and add liquidity to the market, can develop into meaningful and lasting applications. At the end of the day, that is what this is about. Blockchain technology is about software that is being built. And cryptocurrency trading is just so we see on the surface. Cory god is in the details, right . One would think that a Hong Kong Listed Company Might be in hong an just said,at jeh but that is more interesting. Their lawyer is a guy in chicago. His Business Partner is a guy in las vegas. When i called their new york headquarters, it rang on someones cell phone. When i called them a number, it rang and was disconnected. Things are much more interesting here than they seem, and i think that is probably true. That is for all of these investments. The difference between bitcoin and ripple are substantial. It is worth finding out, to really understand what lies beneath these things to try to determine what the Intrinsic Value is, and not just guess that there is a greater fool who will pay a higher price. Emily meantime, cryptocurrency is running into headwinds, not just in the u. S. But in china. This talk about the Chinese Government cutting off the power supply to bitcoin miners. How serious do you think that is . Jehan i think this is the final strike of the Chinese Governments desire to reset the entire story of blockchain. I think what they want to do is clear the decks, and they have done it with exchanges, ipos, icos, and now they are doing it with mining. Ultimately, i think they understand the value and potential of utility for society, for the economy, for industry to build anew, and i think that is what they are doing. I dont think its the end of exchanges. I dont think it is the end of icos. This is merely the Chinese Government resetting and taking control of what they actually believe will be a truly transformational technology. Emily meantime, other cryptocurrencies are getting dragged down today. Cory, you spoke with the ceo of ripple. Take a listen to what he had to say. There is no doubt, 2017 has been, amongst other things, the year of crypto. And within the year of crypto, xrp has outperformed every other Digital Asset out there. Youre to date, as that chart year to date, as that chart showed, we are up about 20,000 . Emily that is from december 27, but ripple is going down with some of the others today. What do you make of it . Corey i think the volatility i am trying not to Say Something obvious it has been volatile with these stocks, these currencies or these trades. But i think our traditional lens of looking at the volatility in equities, for example, saying, wow, it has been down a lot since 2007. Since december 27, or in the last hour. I took last week off so i looked at my bloomberg terminal. Look at what happened to ripple trading over the last day. Sure enough, it is down 11 . But if i changed this to the last 14 days, the intraday chart for the past 14 days, look. Its up a lot, up 100 , 138 in the last 14 days. So, i think one of the interesting things is the volatility that we have seen tends to take the headline, but the longterm rise we have seen over the course of long terms of the year really tells more of the story. I think more to the point when you look at the details and you see the great differences between ripple and bitcoin and between the xrp and the likeminded blockchain technology, but the different ways that they work and the different ways that they trade and the different problems they are trying to solve, you find a much more interesting story. Again, that longterm lens is not the lens we are used to applying when it comes to in moves in equities, but maybe the appropriate one to apply, even though interestingly the futures contracts have not reduced the volatility in the trade of bitcoin. Emily that was jehan chu, kinetic managing partner, and bloomberg editor at large cory johnson. And that does it for this edition of the best of Bloomberg Technology. Tune in this wednesday when facebook, youtube, and twitter head back to washington to testify on terrorism and social media. We will bring you all the headlines. Tune in every day, 5 00 p. M. In new york, 2 00 in san francisco. And remember, all episodes of Bloomberg Technology are Live Streaming on twitter. Check us out. Thats 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. 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