Transcripts For BLOOMBERG Bloomberg Technology 20180125

Sarah Huckabee Sanders says more details on President Trumps proposed border wall will be provided monday. The president warned earlier that, if there is no wall, there wont be a deal on protecting undocumented immigrants brought into the u. S. As minors from deportation. After nearly a week of victim impact statements, a michigan judge imposed a 175year sentence on larry nassar, that is the sports doctor who sexually assaulted young gymnasts. Nassar worked at usa gymnastics, which trains olympians. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im alisa parenti. This is bloomberg. Is and Bloomberg Technology is next. Emily im emily chang. Emily im emily chang. And this is Bloomberg Technology. Coming up, qualcomm slapped with a message line from european chipmakers european lawmakers. Plus, more highlights from the World Economic forum in davos, including our conversations with bill gates and the ceos of Morgan Stanley and the nasdaq. Intel gets ready to report its fourthquarter earnings. The companys first since the specter and meltdown chip flaws were revealed. We will take a closer look at the impact to its bottom line. First, european regulators have slapped qualcomm with a 1. 2 billion fine for anticompetitive practices. From 2011 to 2016, qualcomm paid apple to exclusively use its chips in their products. Speaking at a press conference yesterday, saying qualcomm pushed out rivals as a result. Our decision found that qualcomm cemented its decision by illegally shutting out rivals from the market for over five years time. Emily qualcomm plans to appeal this decision. The company said, we have a strong case for judicial review, and we will immediately commence that process. For more, lets bring in editor at large cory johnson. Expand on what the European Commission is saying qualcomm did. Cory the European Commission is suggesting that your iphone stinks, that it could have been better, and that qualcomm illegally used its market power to pay off apple. We will give you these chips at a rebate if you dont let intel in the door. Emily why would apple do that . Cory the argument here is that intel, by not having a shot, couldnt have developed a better chip. Im sure the people at apple wanted to go with the best chip they could at a better price. Qualcomm paying so many rebates and discounts, basically paying apple off, not only kept intel ps out of apple funds because of the dominance of these phones, so many apple phones with one kind of qualcomm chip in it means that two things happen. It lets qualcomm lower the price of production. Apple phones being monolithic in the way they are presented. Lowering that shifts to other phone makers, keeping intel out of the mobile phone business, which has been a running theme for what weve said about intel for the next seven years. Emily they say there will be no repercussions for apple. Why not . Cory fundamentally what apple is getting his a lower price. They have decided not to punish apple for being in collusion with this. The notion that apple was getting what it wanted, lower prices, not colluding with qualcomm but being the beneficiary of its plans. Emily is this something that they could face a penalty for in the United States . Cory the eu has taken a much stronger stance in regard to anticompetitive prosecutions. Sure some in the Justice Department would disagree. Weve seen cases, particularly against google and now qualcomm, where the eu has taken a much stronger stance than the u. S. Has, for a variety of reasons. Weve seen the eu willing to take on these companies with the notion that competition ought to be better than it is. Emily qualcomm plans to appeal. How likely is it that would be successful . Cory who knows . Department woul. Qualcomm is fundamentally built on the basis of lawyers, more than any other big semiconductor. Qualcomm is a company that is fundamentally built on creating technology, licensing that technology, and using lawyers to make sure they extract payment for those technologies. They are used to indeed they are designed for a need for speed in the courtroom. Emily what makes this even more fascinating is that qualcomm and apple have recently been at each others throats. How does that play into this . Cory there is that dynamic, where apple wants to continue to get lower prices. Apple wants to continue to fight for the lowest price they can get from any competitor or any supplier. They have beat them all up. They will beat up the biggest. Thats where the battle is being waged. Also qualcomm is in its own existential battle, trying to fight a hostile takeover by broadcom. What is interesting here is that broadcom. Qualcomm attracts these massive fines. Big problems in pursuing their license agreements in china. Qualcomm not paying. That has been an ongoing issue for them in china, the most important market for them in terms of where phones are made. It might suggest qualcomms behavior they are so big keeping them separate from broadcom, they might make that argument with regulators that they need to be separate, even isugh their behavior reprehensible. Emily broadcom is trying to buy qualcomm. What does this show for that bid . Cory it shows you the size of this business. The real question is, are they going to have to pay it . Is it going to imperil their business Going Forward . The lower the stock goes, the easier it is for broadcom to take over this company. Whether customers will stand for it is a whole different thing. S reprehensible. The eu seems to be saying, we want more competition. A merged qualcommbroadcom is not more competition. In a strange way, what the eu is thatng in their cards is they may not be for that big merger. Emily cory johnson, thank you. In the latest revolving door, meg whitman, stepping down at hpe february 1, joining the new mobile Media Business founded by former Animation Studio chief jeffrey katzenberg. At new tv in march. The company will be based in l. A. And aims to bring hollywood quality storytelling to videos that last 10 minutes or less. Lookout for new features this spring when apple rolls out a Software Update. What you can expect, next. Bloomberg tech is livestreaming on twitter. 2 00 p. M. In new york. This is bloomberg. Emily apple plans to release a Software Update for the iphone in the spring. Animated emojis will be added to the devices, plus a few other features that have been in the works. Mark gurman has all the details. What features are you anticipating the most . Mark the feature i am newcipating the most this option to disable the battery throttling feature. Remember the controversy we were talking about . Apple released a Software Update last year that intentionally slowed down older iphones in order to have them not reboot, because batteries, as they age this adds longevity to batteries. Emily a. K. A. , batterygate. Mark whatever you want to call it. Basically you will now be able to turn that feature off. Emily that means you will what . Mark if you have an older iphone and you dont want it to slow down anymore, you can turn it off. But apple will say youre putting yourself at risk. You might miss a phone call, this or that. But apple will say yourei thint affect most people in practice, but we will see in a few months what people say about it. Emily there are some new health features. Tell us about those. Mark it allows you to access your Hospital Health records on your phone. Before, you could get your Health Information from the apple watch, from the sensors in the iphone already, and thirdparty devices that integrate with things like fitbit. Now you will be able to get information from your hospital, lab results, doctors notes, whatnot, through the health app. They signed up with they signed up with 12 hospitals. There are a few big names across california, new york, pennsylvania. Im sure they will add more hospitals as time goes on. Emily talked to was about how difficult how difficult is it to get these hospitals on board . They need the cooperation of the medical community, which has been slow to take on new technology. Mark there is across some hospital networks, a uniform way to access data. If you have a doctor in california who has the same server, the same system as a doctor in, say, ohio, you can go to an ohios Doctor Office and get all your information, but the key is dealing with all of those different networks. Obviously apple is not going to put a Software Update out to 1 billion people that could impede on privacy. I think they are taking pains to make sure that wasnt affected. Emily new features for augmented reality, correct . Mark they have a. R. Kit 1. 5. Basically it allows you to project images on a wall or a d ay. Say, i have an animated version of you and i want to project it on my door. For some reason, i could do that now. [laughter] emily and homepod, which was delayed, is now coming out next month. Mark about a month and a half delay, give or take. Out insupposed to come december. Emily not huge, but they did miss the holiday season. Mark they did miss the holiday season. Tim cook told you we would be able to judge it for ourselves t in a few weeks. Emily what do you make of the fact that this was delayed . Mark its unfortunate. This is the second year in a row where they had to delay a major new audio product. If you remember in 2016, 2 month now ther the airpods, same delay for the homepod. I dont know if this is the start of a new trend for the company. It seems to be isolated to accessories. Every time apple comes out with a hot new accessory for the ipad, the iphone i feel like there is something going on with their ramp up for accessories. We will see if it happens with the next one. Emily mark gurman, thank you so much. Now, to another story we are watching. Softbank is leading another mammoth funding round. Be 865 million round to exact. This time, the investment goes to a littleknown Technology Startup looking to shake up the building industry. Disinvestment adds to the portfolio of Softbanks Vision Fund, totaling 36 billion. Joining us now from seattle, dina bass. What does katerra do . A flood of money for a littleknown company. Dina katerra is trying to do what they say uber or airbnb did to the hospitality and the taxi industry. They are trying to Bring Technology and software and standard processes to the Construction Industry in an effort to reduce costs, speeds things up. They basically want to control every aspect of the process, from architecture to interior design, through to standardizing the building and construction work on the jobsite, in an effort to make things go quicker and be more profitable. Emily so, what does this signify for softbank in terms of their portfolio . They have invested in uber and slack. Dina it looks like they are looking for interesting opportunities in a variety of Different Industries that, in some ways, havent changed in many years. Late last year, they made an investment in real estate technology, so that shows an interest in trying to come up with a way to benefit from startups that want to use technology to revolutionize the building industry and take advantage of the real estate and construction boom, the housing boom in many parts of the u. S. Emily what are some of the challenges facing katerra . Dina its interesting. Most people probably havent heard of it, but it has some pretty highpowered backers and founders behind it. Jim davis from silver lake. Their chairman what he is best known in the Tech Industry for is having built up a Company Called flex tronics, which did something similar in the Electronics Industry to what katerra wants to do in construction. They became this massive company, making Electronic Devices and gadgets for other companies, things like xbox or hp printers. In some ways, the Construction Industry is similar to the electronic industry. There are a lot of ways in which katerra wants to do the same thing flextronics did. There are ways in which it is much more challenging. The Construction Industry faces a lot more variation than the Electronics Industry in the building and assembly side. A lot more variation than theyo0 u. S. Withties in the different weather, different seismic requirements. Katerra is trying to preassemble a lot of materials, things like counters or cabinets or the exterior and interior walls. But they still have to do a lot of construction on site. The Construction Industry is facing a shortage of skilled workers, so thats a challenge for them as well. These projects also take several years. Sometimes they run out of money midstream. That is a little different to what flextronics faced. Emily so, when will we know how successful Softbanks Vision Fund is . Obviously, they are making big bets on a lot of companies, really big bets. At what point do we know if this is really paying off . Dina i dont know. They havent even finished off the whole fund. This is a fund targeted at 100 billion. They have started making investments. Even with katerra, i think its too early to know whether that one company in the fund will be successful. The companys chairman told me they are at 1. 3 billion in one company in the fund will be bookings, and redicted it would be 10 billion in revenue in a decade. Thats a huge bet, but it is still early days just for that one company. Add in the other 99 or so companies that softbank has invested in. There are some Big Companies in there, some big names that seem to have a fair bit of success , and in others, a lot of potential. Its a lot of disparate areas as well. Emily obviously, i know we will continue to follow softbank across the map. Bloomberg techs dina bass, thank you as always for stopping by. Coming up, more from bloombergs coverage in davos. We will talk to the ceos of Morgan Stanley and the nasdaq on the future of cryptocurrencies. And if you like bloomberg news, check us out on the radio. Listed on the Bloomberg Radio app, bloomberg. Com, and, in the u. S. , on sirius xm. This is bloomberg. Emily getting out of the bitcoin business, the Online Payments Company says it will stop processing Bitcoin Transactions on april 23. The company says bitcoin has become less useful, explaining confirmationion times and fees have gotten longer for the cryptocurrency. Morgan stanley Ceo James Gorman says bitcoin isnt going away, but he does have some reservations about the frenzy over the cryptocurrency. He spoke to confirmation times and fees have gotten our g editorinchief John Mickelthwait at the World Economic forum in davos. Bitcoin is not going away. Its not a fad. But the aggregate market cap of bitcoin globally ofhink it is less than twice Morgan Stanley today. So they could buy you. [laughter] i was making an entirely different point. [laughter] listen, we think we are an important institution, but we dont deserve the kind of press that bitcoin is getting every day. Bitcoin is punching above its weight. It is speculative, filling a need at the moment, but it is not fundamentally changing the global landscape. For the average investor, they i would advise them not to be investing in that kind of speculative instrument. Another big theme youve talked about is automation. There is a lot of evidence, all these things people beginning to ask about. Do you think in Wealth Management and Investment Banking you are relatively safe from that . Which way do you see that going . To the core question of automation and other related topics, i was asked by a journalist recently about how much i focus on competitors. I said, obviously, youre in the same industry, you have some focus, but its not what we get out of bed worrying about. I worry about ai, about automation, cyber risk, digital. All of these new technologies coming to the market at the same time are transforming the way business is getting done. We try and look at each of our businesses, back to your core question with m a, highpriced, highly complex global transactions, it is hard to automate that. It is very hard to build an expert system about how to advise a board. The electronic trading in equities has long been going on. Increasingly in fixed income. With Wealth Management, the evolution of the Digital Space is not new. Since schwab, ameritrade, these firms have been around, they have been providing Digital Transaction and advice for 2. 5 decades. Decades. But its going to continue to cause firms like ours to provide both human capability and best in class technical capability. In class technical capability. Emily that was Morgan Stanley Ceo James Gorman. Nasdaq ceo Adena Friedman joined in class technical capability. Emily that was Morgan Stanley Ceo James Gorman. Nasdaq ceo Adena Friedman joined bloomberg from davos, speaking to Erik Schatzker about the Company Working on cryptocurrency futures. Take a listen. Adena we have been working with the industry and with a great adena we have been working with the industry and with a great partner to look at whether or not its the right thing for us to do. And i think that we are still evaluating that. We have been talking with the industry to say, is this something we have two Bitcoin Futures out there. Is there something different, a different construct . Would that be of interest to you . Would there be demand . If youre going to create a product, you want to know that people are going to use it and use it to differently than how its being used today. We have to selfcertify as a Futures Exchange for this. We would use our slices to do that, but we have to make sure, from a Risk Management perspective, we are fully prepared. Those are the two things we are still working on. Erik any preliminary conclusions . Does it seem, appealing, regardless what you think about crypto as a medium of exchange or a stored value . Adena i think Digital Currencies and cryptocurrencies will have a role in the global economy. The question is, will they mature to a state used for the transfer of goods . In the meantime, there is a lot of demand for that indicative price and that ability to trade it. Its a matter of can we create a construct that is unique enough and different from whats already there . Erik would you think about providing a futures contract for something other than bitcoin . Say, ether or ripple . Adena we have two Exchange Traded notes listed in our nordic markets that have been done through a different partnership. One is ethereum. The other is bitcoin. We would look more holistically, not just that one cryptocurrency. Emily that was nasdaq ceo Adena Friedman in davos. When brought, went public with a good for with a with a bidic for qualcomm we will discuss the impact on apples supply chain. If you have a bloomberg, check out the bloomberg terminal, tv. Watch us online, click on our charts and graphics, and interact directly with us. Go to tv on your terminal. Contact us on twitter. Check out tick tock by bloomberg. The first 24 hour Global News Network streaming live on twit ter. Network streaming President Trump is on his way , and his top economic advisers are setting the stage for the rollout of his America First manifesto by signaling a tougher stance on trade. Treasury secretary Steven Mnuchin said a weaker currency is good for u. S. Trade. Morgan stanley Ceo James Gorman said hes more worried about record highs in the stock market than about the fed. At this point i am less worried about Monetary Policy and the alignment into a more natural stands, which is starting in the u. S. It will eventually moved to japan. The markets are very exuberant now. You have markets at record highs. These things dont go in a straight line. Not a markets are very exuberant now. You have markets at record highs. These things dont go in a straight line. Not a selected 28 senior policymaking body. It adds the signal that he may step down from the helm of the central bank. Zhou has been interest of the pboc since 2002, making the longest serving governor. A panel of reasons markets are t now. You have markets at record highs. You of brazilian judges increased prison sentence to more than 12 years. It all but kills chances in his october president ial election. The Sao Paulo Stock Exchange closed at a record high. Up 3 . L was checking markets midsession abouthursday, it is all the davos dollar dilemma, the weakness in the u. S. Currency pushing up currencies. 1 . An yuan up as high as a south korean Government Official saying they are monitoring the move. The japanese yen in focus. All of that pushing. Mixed movement in these equity asian markets. Tech players sold off yesterday coming back after the selloff. You have the halt in the raleigh we have seen in the h share index. Eherally we have seen in in th h share index. It has been driven by the financials. We have seen a halt in that market after 19 sessions of gains. A quick check of em currencies. Checking this chart. South korea says they are monitoring these extensive movements in the yuan. A mixed sector across asian markets this thursday. Lets return to our top story. Qualcomm slept with a massive fine for paying apple to ensure that only its chips were used in iphones and ipads. Its a big development. What has been a dramatic few months for the semiconductor industry, and qualcomm especially. Lets bring in ian king, who covers all things chips. Whats your perspective on this fine . Ian their perspective was, no big deal. Nothing to see. Emily just 1. 2 billion. Ian they have 30 billion in the bank. This doesnt affect the way we go forward, they say. It is unavoidable. Pretty much every major market in the world is looking at them. Chinese have fined them. The koreans have fined them. The taiwanese have fined them. An investigation by the doj here. This is a cumulative thing which looks very bad for them. Emily fined for the same thing . Ian a mixture of things. The european thing is focused on the chip business and not so much on the licensing business. Regulators are looking at your business is not a good thing. Emily could this impact broadcoms bid for qualcomm . It does make them an easier target, right . Ian you nailed it. The whole reason qualcomms stock is where it is is the whole world is against them. If you are an investor, how do you get behind this Company Facing all of these challenges . The stock is depressed. Therefore broadcoms bid may be looks more attractive in that light. If there is no path getting these resolved, we have to point out that qualcomm tends to win over time. If there is no clear and present path towards getting away with all of these things, then maybe the broadcom offer does look more attractive. Emily you have a new story out about how broadcom is already dominating the supply chain. Does that mean for apple as well . Ian we looked at this. You remember when broadcom came out and announced the bid for qualcomm, they were like, dont worry, weve talked to our biggest customers, they are ok with this. You think, hold on a minute, that doesnt make any sense. Why would they want people getting together . Prices normally go up. The licensing business if that goes away we have reported that probably goes om takes it over. Emily what is it . Is it a shell of a company . Whats left . Ian the chip business is really important. What makes qualcomm a broad threat to apple is apple makes competing products. Full makes apple makes processors which compete with snapdragon. Snapdragon goes in the chinese handsets, taking sales away from apple in china. Maybe if broadcom doesnt put as much money into that were doesnt focus on that business as much, apples premium starts to go back up. It starts to be perceived as the best. There are all of these considerations. Emily i know you will keep us posted on the entire playbyplay. Forking, who covers chips thank you. Ech, thank you. Intel is getting ready to report earnings on tuesday, the first set of earnings since the chip flaws were revealed. Our bloomberg editor at large cory johnson took a look at the companys response to the problem and the curious timing of a stock sale. Cory ces 2018, the Biggest Party of the year for technology. Among the keynotes, intels ceo, showing off the kitchen sink of tech. From vr we place multiple cameras around the perimeter of a playing field. Cory to pilotless helicopters. To a legion of drones. You just witnessed the worlds first 100drone indoor flight show without gps. Cory to, why not, an nfl quarterback . The real tony romo. Hi tony. [applause] cory but there was an elephant in the room, the flaws in the intel chip design. They allow hackers to steal data from Computers Running intel cpus. How many computers . Well, intel makes 90 of the worlds computer processors and 99 of the server chips that power the internet. Flaw effectively puts every pc, smartphone, and server in the world at risk. He tried to soothe concerns. As of now, we have not received any information that these exploits have been used to obtain customer data. Cory not yet, but hackers have proven themselves to be persistent. The patch for the flaws is flawed itself. It can slow chip speed up to 30 . The patch has not helped stock performance. Will the Security Threat threaten intel sales . The Company Struggles to crack the smart phone market. Companies like amazon, apple, and google are working on their own chips. To make matters worse in the six months that intel was stealthily trying to work on a fix for the flaw, the ceo sold 24 million of intel shares. The company says it is a routine sale, but that has not stopped lawmakers from investigating. The last time intel had to fix a big chip problem like this was a 1994 pentium recall. That caused into 475 million. That cost intel 475 million. That kind of problem might not fly with investors. Emily our bloomberg editor at large, cory johnson. Well, the nyses biggest ipo since snap made its public debut. A brazilian Payments Company pagseguro raised about 2. 7 billion in its ipo and rose more than 4 on its first trading day. The company has made headway by selling rather than renting car processing machine, and providing an easier understanding policy for those that were not expect car payments otherwise. Speaking of ipos, coming up, one of the most successful Public Offerings of 2017, okta. The cloud identity company. Can it sustain that valuation . We ask the ceo next. This is bloomberg. Emily a stock we are watching, Electronic Arts fell a little more than 2 in the session, its worst performance in a month. This after a kotaku report that ea may delay the release of its highly anticipated anthem game early next year. Okta is out with its annual businesses work report. It is an indepth look into how organizations and people work today, exploring the apps and services used to help productivity. The top Apps Microsoft Office 365, salesforce, g suite and box, however one of the more interesting highlights is on security data. Joining us, ceo todd mckinnon. Ceo of okta. Thank you so much for joining us. You have more information about where threats to enterprises are coming from. What did you see . Todd this is our Fourth Annual businesses work report. It gives our customers a look at what is happening in the broader ecosystem. Whats the Fastest Growing application . There . Ends one of the trends is around security. Of the top 15 fastestgrowing apps, seven are actually security tools. Its something we have never seen before. People are not just using applications, but they are using technology to secure those applications. Things like the fastestgrowing of those tools a security and , management tool for macs. People use more macs in the workplace, it becomes a fastgrowing app. Things like cloudflare. The guts of security departments in companies. With all the Security Threats we are seeing, they are becoming a big deal and companies are invested in those technologies. Emily what trends are we seeing from the threats themselves . Todd where they are coming from geographically. You hear people talk about Security Threats, and its always from china or eastern europe. What do we have against them . What weve seen in the data is that Security Threats are really originating from all different kinds of countries europe, western europe, eastern europe, even from the United States. The takeaway for us is, you can limit your security exposure by limiting the geographies that can connect to your system. If you are capable of locking down access to your systems from certain geographies, you should do that. Emily the report also talks about the effectiveness of password policies. How effective are they . Todd in the security arsenal, there is no one silver bullet. You cannot just lock down things geographically. You have to use strong passwords, multifactor authentication. You have to make sure accounts are turned off and on at the right times. Security folks have a hard job. Luckily, there is a lot of technology around to help them be more secure. Emily are you finding that password policies are not as effective as they should be . Todd the problem with password policies is that they are not always appropriate for the level of information being secured. You get this phenomenon where you have these crazily restrictive rules about complexity for something that may not be that secure, or may not be that sensitive. On the other end of the spectrum, you will have something that doesnt have enough complexity, doesnt have enough multifactor authentication, isnt high enough security. Putting the right security restrictions on the right data based on sensitivity that is the holy grail for customers. Emily you had one of the more successful ipos of 2017. The question now is, can you keep it up . Who are you taking share from among your competitors, one of which is microsoft . Todd we are fortunate to have pioneered this category of this concept of an identity cloud. Before okta, all the identity products were really seen as point features or addons to other platforms. We have pioneered this idea that identity is its own cloud, a standalone platform. Emily what does that actually mean . Todd it means there is value in connecting any kind of technology to people. Having that prebuilt set of integration that allows companies to seamlessly pick the technology they want to use and technology to people. Having that prebuilt set of seamlessly deploy and connected securely to their users, that removes a lot of friction and enables businesses to adopt Technology Faster and helps their own companies be more strategic and grow and make their employees more productive. Emily you provide security to companies that use multiple kinds of products. If you use Microsoft Office and workday, you can have a seamless use of all of those. Todd or if you are building a new customer website or a better mobile app for your customers, you can have Stronger Security and it is easier to use on that front as well. Emily who are you taking share from . Todd its a new category. The concept of identity as a first class platform is a new category. As more Companies Adopt the cloud there are legacy competitors from the big identity suite like oracle or ibm, but, largely, its a new category as the crowd emerges , and we are there to fill that gap. Where do you see to expand the product and expand geographically in the near term . Todd the product is very broad. We do everything from customer identity to employee identity. So, the product is already very broad. We will continue to to expand te product and expand geographically in the near term . Todd the product is very broade areas we have. I think the big growth will be internationally. Only about 15 of our sales are international. Partly because north america is so strong. Last time i looked, more than 15 of the people are not in the u. S. Emily where internationally . Todd primarily europe, extending to asiapacific and eventually japan as well. Emily thank you so much. Coming up, microsoft cofounder bill gates from the World Economic forum in davos. Why he says President Trumps America First approach could damage u. S. Influence in africa. This is bloomberg. Emily googles ceo is open to paying more in corporate taxes. At the World Economic forum in davos, he explained that the more important question was where google should pay. The companys current blended Global Tax Rate is 20 . Critics have accused large u. S. Tech Companies Like google of paying too little tax outside the u. S. , despite deriving a large portion of revenue from these countries. Bill gates, cofounder of microsoft and cochairman of the bill and Melinda Gates foundation, says President Trumps America First agenda could damage the u. S. s longterm influence in africa. Gates spoke with our bloomberg editor John Mickelthwait in davos. They talked about his foundations efforts in africa and their fight against malaria. Bill there is a tendency for several things to happen, unless you stay committed to these things. One is that you get Drug Resistance. Either the insecticide on the bed nets. We have Drug Resistance to that now. We are working with the private sector to get innovation there. The drugs themselves. We use these combinations. In southeast asia, we have resistance there. Just the Energy People put into these programs one of the great ironies is that as you get malaria cases down, then the government will tend to move on and focus on something else, so youll see a rebound. The last three years because a lot of the bed nets have been wearing out. The last three years, we actually have had the number of cases stay flat. In a few countries, including nigeria, the cases have gone up. You always have some variation in terms of the weather. The wet season is when the mosquitoes prefer to breed, in an exponential way the Community Needs to get its act together. Showpiece things where we really learn, like this Central America thing is a key part of that. The chinese are looking at doing works which are pro bono, as opposed to building things with a much more commercial advantage. Bill i think as they are becoming richer, as they are playing a stronger role in the world, china has a conference with the African Leaders on a regular basis. I will attend later this year. Compared to the u. S. In history and today, chinese aid is very small. The african countries appreciate, particularly in hiv. Compared to the u. S. In history and malaria, where under president bush the u. S. Made these big increases they totally appreciate that we have done that. And i think we really can afford to keep doing it. Its a very small part of the budget. I dont think going to them and saying, hey, we need to increase aids and malaria deaths because we are short of something really is the best idea. There is a social good there. And malaria, where under there is also this question of soft power, whether america is prepared to commit itself to those things. Is that something you worry about, especially with the Current Administration . Bill the balance of hard power versus soft power, the u. S. Uniquely has the ratio emphasizing hard power. Id hate to see it shift even further. As part of these budget discussions, do you grow the state department at the time you are growing the Defense Budget . Even the secretary of defense has been eloquent that you dont want to give up your soft power tools. Its all being debated. You follow a lot of history. Isnt this arguably the first case of a global hegemony giving by nots hegemonic power investing in soft power . In this case america is actually pulling back from helping the rest of the world. Bill i wouldnt say that its unique. The u. S. Has often had this debate in our relationship with the united nations, which has had ups and downs under different administrations. Keeping some pressure on the u. N. To be efficient and reasonable is not a crazy thing. How far do you go . The u. S. Has often had this debate in our relationship with its all to do with specifics. In the case of health, the lives being saved for small amounts of money. You can aim to let the country up so that it is selfsufficient and get rid of the disease. It is not a commitment youre stuck with forever. I think these ones, even in this atmosphere, make the cut. Do you think george w. Bush, in a strange way, never got the credit he deserved for trying to save lives in africa . Bill he didnt. Africa is less visible. Not as many people go there. His initiative, which was hiv focused, those were fantastic things. In some circles, i think he does get credit for those things, but probably not as much as he deserves. One last thing. President trump, famously, he has described these countries in a not terribly nice phrase. Do you think he should concentrate more on the poor of the world . Bill i think he should. Thats the area where wealthchosen to take the created through microsoft, that Warren Buffett has been so generous in providing. I understand that money can be very well spent. Im in there saying, come on, lets keep up the good work. Weh created through microsoft, that Warren Buffett has been so generous in providing. Emily microsoft cofounder bill gates there with bloomberg editor in chief John Mickelthwait in davos. And finally, breaking news out of washington President Trump speaking to reporters about Robert Muellers investigation, saying he would talk to mueller and say that there was no collusion with russia. President trump is leaving tonight for the World Economic forum in davos. We will have full coverage on not on Bloomberg Television and radio this thursday. He will be getting on a plane momentarily. 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. Comcast business outmaneuver. Announcer the following is a paid advertisement for looked away speed with dual technology, presented by shark ninja. Furniture can get in the way. Hadet your room clean, you to move the furniture. With the push of a button, you will instantly have incredible reach. No more moving furniture and no