Transcripts For BLOOMBERG Bloomberg Technology 20240714

Cofounder ofhe overlap in the future growth of these markets . s stake in juul, apple, Steve Wozniak. He discusses everything from trade to services, privacy on they paid about 12 million. Facebook. Federal officials charming when it comes to the heat not former uber engineer anthony burn product, it is the levandowski from stealing exclusive distributor in the u. S. Technology from the waymo unit. They are both vapor priority for the noncombustible products. They do target separate niches. Juul tends to be a younger fbi. Adult, some even minors trade secrets, these are the unfortunately. Crown jewels of companies. Taylor joining me to discuss is the other product, because it uses finely ground tobacco as bloombergs eric newcomer. Opposed to flavored nicotine, it what a long saga it has been. Targets an older demographic, which really looks to the a total surprise. They settled this a couple of oldfashioned tobacco, almost like a pipe experience, as years ago. There had been a private arbitration but the idea that opposed to the nicotine hit. There would be criminal charges taylor i think broadly is something i think people had speaking, talk to me about largely given up on. This is a big deal for silicon Regulatory Environment as it comes to how people think about valley. Taylor talk to me about the ecigs. Difference between the two i have heard on one hand that it trials. They settled one come is a gateway drug. Arbitration. But this seems to be a criminal others are wondering if the fda thinks it is more of a probe. Eric stealing trade secrets replacement. Involves theft. , its not just about the arm some of the regulatory pressure that you see . Is about fundamental laws and whether you can take things from your employer and use them for your own or someone elses anna i think it does have a place in this debate. Benefit. Taylor one headline that caught there has been this balancing act that the government has been my eye is that they said that the case is ongoing, which led trying to keep up with. Maybe ecigarettes can help people quit. They are seeing teens use them me to think there could be more people at risk. More and more. Nicotineas said that eric there are not a lot of details in the indictment. Can have harmful roof harmful an obvious question is that Travis Kalanick sort of effects on the brain. Next year, there will be a recruited personally anthony deadline in may where these levandowski to come to uber. Companies like juul will have to the question, is there anything submit applications to the fda untoward about what they agreed to get approval for their upon or talked about. Product. Taylor wonderful analysis. Levandowski has thank you. Bloomberg News Reporter anna ed been the central figure here. Ney and Bloomberg Intelligence analyst ken shea. Kalanick was a central character in the civil coming up, we sit down with a litigation. Taylor remind me what is at Silicon Valley legend. Steve wozniak on the trade war stake. Who are these characters . And the company he cofounded, apple. If you like bloomberg news, for people who havent been check us out on the radio, the bloomberg app, bloomberg. Com, following this, what are we and in the u. S. , on sirius xm. This is bloomberg. Really looking at . Levandowski is a key figure in selfdriving car research. He was impatient they werent making enough progress. Wenteated his own startup, to uber, a huge blow up. He went on to keep working with self driving cars. He has gone so far as to claim that he is working on a religion around artificial intelligence. This is a true believer in the most ridiculous sense and self driving cars. Taylor any other big deadline we expect . Eric we are hoping to get much more information about the case and what is different from last time. Another big story, it is all about Global Tobacco giants Phillip Morris and altria. They are in talks to reunite after splitting up more than a decade ago. Aul, which the brand has stake in, and it could have implications for the global industry. Discuss, Bloomberg Intelligence senior tobacco analyst. Newswashington, Bloomberg Health regulation reporter. Let me quickly start with you. All tria is a pretty attractive target for Phillip Morris, in part because of juul. Is that part of what was driving this merger . Thet is certainly one of big factors. I think there are three paths. U. S. Smokers who could convert to the platform, it could be juul, and it could be the cannabis opportunity, likely all three. Things from your side of over in washington, what is the regulato the first thing i thout taylor we are getting some late news on tuesday. Telecom has filed for pelaton has filed for its ipo. It filed with various banks including Goldman Sachs and jp morgan. Of 915d a 2019 revenue million, looking at a net loss of around 196 million. Net loss is an increase from in 2018. 48 Million Companies are hereby ordered to start getting out of china. That is what President Trump tweeted. Regardless of whether the president can actually force companies out of china, is trade war has highlighted just how important that country is too many Tech Companies like apple. Be an and to the turmoil the matter how many times ceo tim cook phones the president. The iconicne of inventors from Silicon Valley, who cofounded apple. Steve wozniak. That introduction barely does you justice but for the sake of time, we will leave it there. When you think about where we are in terms of trade, tariffs, tweets, given your multi decades of experience, how do tensions feel now compared to previous years . Steve my experience is not in political areas or economics or finance. I have opinions. People might come to different conclusions of whether tariffs are a good idea, bad idea. Both people would go down a line of thinking that is logical and connected. Thatnt have a mathematics prove one thing is better than the other. We just have opinions. I myself will fall into the camp that i want the free market to rule. A come from my home background. My background was very compatible, growing up in Silicon Valley, where more than half the people speak nonenglish. Cooperation for the competition. I put on a huge festival and in 82. Million tickets we put out a whole policy, programs in schools in all 50 states, things like john nash, who the movie Beautiful Mind was about, cooperation can lead to better results than competition. I am into working with others. What is our country called . The United States of america. 50were going to have 13, now different countries, each with. Heir own rule of laws if wood is manufactured more efficiently in oregon, i will oregon. Ood from i am more of a sharing, be open in business and to the world, try to find ways to cooperate and Reach Agreement that way. Agreement that way. It is going to have an advantage in balance of trade. Taylor you mentioned competition. That leads me to wonder if composition is if competition is more fierce this time around. Are you worried about competition from a samsung, huawei, perhaps encroaching on apple and some of the big market shares . Steve i have thought about that, but i dont say that there is one logical rule that comes to one answer for all. I just happen to be more against competition. We are taught from the time we go to school, my school, right or wrong, my team right or wrong. I am more into thinking. Also, why do you have to be, i am going to hurt you, throw my balance of force against you. That doesnt make friends. We should try to be friends with all the countries of the world which are important. As far as how it could influence know aa lot of people lot of the tech products, the manufacturing shifted to china, the shenzhen region. So what . Let us make products very lower buys thepeople who iphone pays less. Why do we have to say, oh my god, the balance of trade is going in their direction . Especially countries where china is balanced on the development curve. Look where they have come from. Taylor you talk about all be in friends and we know tim cook has had direct dialogue with the president. If you are still involved with apple, or tim cook for that example, what sort of conversations would you be having with the president . Steve i probably wouldnt because with this president , i dont think it would be productive. I would never raise a child to be like that, i am number one in the world, i am always right. I would just ignore it. I wouldnt say anything bad about the president , be nasty to him. Though, being a very important Economic Force in the United States, i think tim cook actually gets the president s ear a little bit and can warn him, if we suffered in a balance of trade with more important products. That is an important thing to think about. That would be scary if we lost sales just because of that. Taylor Steve Wozniak, you will be sticking with me because when we come back, we will take a look at the transformation of the company you cofounded, apple. This is bloomberg. A story weupdate to discussed earlier. Former uber engineer Anthony Levandowski has pleaded not guilty to stealing technology from the waymo unit. The indictment adds a new criminal chapter to the saga aymos civil claim. Became household names thanks to apple. But are things changing as apple shifts more money into the Services Sector like credit cards and apple tv plus . The we think this is key to business and we think the key is 100 million more consumers in the next few years. Services, thathe is the growth. Taylor who better to ask about apple than the man who cofounded it, Steve Wozniak . What is your take on how apple has transitioned from a Hardware Company into now more services . Steve i am very proud that we have been able to transition. We started out as the name apple computer. When we moved into products that were more personal in nature like ipods and iphones, we dropped computer from the name. Being flexible is very important for a modern ongoing company. Moving into services, if that is where a lot of the business is. Apple is a huge company. Apple can only move in directions that will be very large. We have looked into other products like watches. That is about my favorite piece of technology in the world. When apple pay came along, apple took a lot of steps leading the industry. Now we have faced id. We took the touch id and moved it into apple pay. ,t is also so unbelievably easy especially if you have a watch. That is important. Making life easy is what we were known for in computers. Now, apple pay, the upper credit card is even more secure. The looks of it fits apples branding apples branding is to have a lot of secrecy about what they are doing but also styling in unity. Styling and beauty. It is the most beautiful card. A numbert even have written on the card. There isnt a camera that can see what your credit card number is. There is no way people in a retail store ever get your credit card number. Protecting your privacy, everywhere you go. Closelydnt track that in my mind. We see that you bought a milkshake two hours ago. I dont want somebody coming up to me and saying that . Taylor you are giving us free advertising because you keep flashing your iwatch around. He said it was one of your favorite piece of technology. The iwatch when it came out, they called it mediocre. Since then, he has really grown. Have they done great in adding the Health Services . Steve i am not a biggie in Health Services. But everywhere i go, people are using it for that. That is one piece of it. Not having to carry a phone, not having to use a phone even. We have the iwatch on cellular, i can text my wife, walking the dog. Apple pay is the best. I put my movie tickets on the watch, my boarding passes for flights on the watch. I get notifications all the time. A hotel, iuter in myed to the watch i use computer in the hotel, i moved to the watch and pretty much skip the phone. Everywhere you go, look on the sidewalk or in front of you in the street, there are people walking along and not seeing anything except their phone. I dont want to be in that addictive type area. I skipped the phone for most things except for occasionally checking in. With 200ickly, billion of cash on the balance sheet, what should apple do with it . Steve i never even think about that. I do not want to think about money, large amounts of, where to put it. Apple has been doing a very fine job. Apple makes a certain amount of money, profit return on investment. You have to look for investments that will keep that return level hybrid return level high. I trust businessmen who know a lot more about business than i do are inside apple. Taylor when we come back, we will hear more from Steve Wozniak about the question of whether or not big tech has gotten too big. This is bloomberg. From the 5am wakers, to the 6am sleepers. Everyone uses their phone differently and in different places. Thats why Xfinity Mobile created a Wireless Network that auto connects you to millions of secure wifi hot spots. And the best lte everywhere else. Xfinity mobile is a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy an eligible phone. Click, call or visit a store today. Taylor this is bloomberg technology. While the u. S. President ial election is still more than your way, one topic that will not go away, big tech and antitrust regulators. Bernie sanders on monday weighed in in his oped in the columbia journalism review, saying when it comes to Silicon Valley, i will appoint an attorney general who more stringently enforces antitrust laws against tech giants like a spoken google to prevent them from using their in normas market power to organizations. S an independent news outlets that do not have the corporate infrastructure to fight back. Still with me is Steve Wozniak. What is your take on antitrust . His big tech to big . Steve im against monopoly powers being used, not opening up the world to equal competition, using a power in unfair ways. I think that happens a lot with tech. People love technology, aspects of it, but then they always find complain about. There is an awful lot. A company that has a strong presence in one market, using that presence to grow another market is sort of unfair. Is,example i used long ago if you owned all the gas stations and then you said we are converting the nozzles of all of our gas stations and they will only work with the new cars we are coming out with, that would just be unfair. That would be using your power in one market to subsume another, and we see this all over the place. Just apps that come standard with products with products like phones do that to some extent. Im in favor of looking to splitting up companies. I wish apple on its own had split up a long time ago and spun off independent divisions in faraway places and let them think independently. But thats my opinion. Its not like there is one set of facts that makes it right. Other people can come to other conclusions, but i think big tech has gotten too big. And it has taken our choices away. Taylor what is your prescription to break up big tech . Selling off pieces of apple or facebook . What would be your prescription . Steve i think apple is the best of the companies, for different reasons, making money from good products. A lot of other companies, like google and facebook, should allow competition. For example, facebook. Give me a choice to pay for almost no tracking and explain to me, if i let a friend who is not really a good friend, they might get some of my data that i didnt want them to but i made a mistake. Force them to have an ability to easily export a file that you can export into a new book and that would bring along all your friends as well as your timeline in your other data. Still inver and we are the same friends groups privet that would force competition. Competition forces a company to make good products and be the best that it and i just that weve got you trapped. Taylor his date of the biggest concern here and is that what worries you the most . Steve the data that is accumulated on people . Yes, it does worry me. I wouldnt say the most. Like tracking you and things like that, to some people it doesnt matter and to others, it does. Honest. Should be is if you think youre getting one level of protection of your security and your safety and knowledge about you, you should be getting that level. If you send mail to somebody and say my favorite color is green, to my wife, that should be kind of private david is kind of like whispering in your ear. It shouldnt be that everyone with access heard it. Human beings listen to data thats recorded. That is beyond what you think is going on. On always preferred the consumer over the producer. Taylor when we transition to talk about cryptocurrency, is that the future, or all hype . Steve bitcoin is an amazing example. It has really lasted and done its job for a decade or whatever. You never heard of any technology that had code that was that secure. Bitcoin is gold. Then like 200 other companies that had their own voice and want to be currency. I dont believe that, i dont want to look at bitcoin prices and invest in it. However, im getting involved in a couple of startups based on blockchain, which is a technology that makes bitcoin work. But its not like you trade a token and it just becomes artificial cash. Is like the tokens are representative of ongoing, Efficient Companies that are very profitable now. Im very conservative economically and financially. Im only getting involved in these two basically have another financing arm for companies that are already very profitable and making money. Taylor so talk to me about facebook libra. Do you see that as a competitor if you are investing in other cryptocurrencies or Blockchain Technology . What is your take on libra . Steve no competitor at all. Im talking about where cyber tokens are just like shares of stock in a company that is ongoing and making money. Libra, i dont know. I dont even know the principle behind it but im sure it comes into that category of antitrust. All of amany sudden we will get them into our cryptocurrency and challenge bitcoin. It should be done independently with competition. Lets see how that goes. Im not really against it, but im against any bad uses, implementations, not giving your users choice or knowledge. At least be transparent. Transparency is the best thing you can have. You were honest enough to come and talk about some of your adventures, and because you gave us the teaser, talk to us about some of the new adventures. What can we expect from you in the coming months and years ahead . Steve i do a lot of public speaking around the world, but right now i have about four startups going on. I like startups. Much more than the big huge Tech Companies. Is one. Valley, khan and a university for technical education. Im about to have my name attached to such a thing. I have wanted that for eight long time. A couple of these are blockchain. There are countries like malta that desperately want to become known for wellregulated and very open but usable blockchain companies. Here is one in gibraltar im not here to promote myself or to promote them, but i have a busy life still. Taylor this is wonderful, its our pleasure. Steve wozniak, thank you so much for joining me today. Being the cofounder of apple barely begins to describe your experience. And stocks closed amid uncertainty over china trade talks. Well discuss who has been most affected by the dispute. That is next. This is bloomberg. Taylor hp shares are up in afterhours trading after the company gave a forecast that top wall street estimates. They reported thirdquarter , missing estimates. Hp raised Employee Earnings and guiding progress in his effort to cut cost and reshape its business to highmargin products. U. S. Stocks slipped again tuesday as investors digested the most recent twist in the ongoing u. S. China trade talks. The s p 500 fell for the third time in four sessions after chinese officials question President Trumps comments about trade discussions between the two countries. This is the day after trump said beijing very badly wanted to make a deal. Taken chip stocks have all been among those hardest hit throughout all the trade tensions. Hogan is here, and the palatine news seeking to file its ipo, as we talk about some of these unicorns. You see some Revenue Growth but you continue to see losses on the bottom line. Are you nervous at all about that . We look at some of these companies that come out and wonder if they stay private too long. So some of that amazing growth, that early growth was not publicd by the initial disaster. The other piece of the puzzle is yes, amazon was able to go for a long time with growing revenue and never really showing earnings, but i think that timeframe is behind us. , there hasave proven to be some point in the future flow they flex to cash positive. Then just how much growth in revenue are going to pay a or. Tiple f taylor time saying we expect operating losses in the future and may not achieve or maintain profitability in the future. What is the path to profitability . These overvaluing some of companies, given that they frankly, cannot make money . Art not sure where rideshare some some point, huber has plans to do a lot of other things logistically. With palatine, the question you have to ask is threefold. There is a real cult following around that stock and that in and of itself, that lifestyle. There is als like creative mode around it so people are involved in the palatine experience are involved for a lot of reasons, not just exercise. But at the end of the day, how much scale do they have to grow to to get enough of the market profit, and should they stay private longer until they can have someone to into what makes them some window into what makes them a Profitable Company . Companies as you digest the landscape should you be or not be targeting as you take a look at what companies can or cannot do well within the midst of the trade fight . Art semiconductors are front and center on this battle. Look at Philadelphia Semiconductor index, you can point to the inflections and trade tensions. The peak to trough in may when things fell apart, the Semiconductor Index went down 18 and the Broader Market went down about 9 . Youre seeing a doubling of the volatility in semiconductors and theres a lot of reasons for that. China is the in market for them. When we look at the Semiconductor Index we say, why would you step in the middle of this spray with a blunt instrument that is at the tip of this fight when you could step back and have other exposure to technology. Overlay of the index there is much less volatility. You dont have the comings and goings. Is it as simple as self qualcomm and by salesforce cell qualcomm and buy salesforce . Art you could pick a multitude of which of those companies or you can buy and sell both of those indexes and do an overlay. While we are in the heat of this, it doesnt appear that were close to the end of the trade war, it feels like everyday we are taking one step forward and two steps back. I would avoid the semis at all cost. Think about companies that dont have that index. Taylor we just spoke with Steve Wozniak. Im going to put you on the spot. Talk to me. He talked a lot about big tech, frankly, we need to break up big tech, particularly facebook. Do you agree . Art whether i agree or not, its going to be an issue through the election cycle and probably afterwards. If only for the fact that that had enough opportunity to get things right in terms of keeping our data safe. That is a huge part of the problem. Argument bipartisan going on right now that perhaps not only have the gotten too large but theyre not doing a very good job of keeping us safe. E continually hear this they are not alone. It is all of social media. Youre not going to pick facebook out and say they are the bad actors. It is the whole group. The product is up. Taylor talk to me about some of the old companies, apple, microsoft, transitioning from hardware into cloud services. Art they have done an amazing job. Cisco used to be 3 . And theythe teens now did that in 12 calendar months. You are seeing the same things reflected in microsoft. Apple is looked at as a services company, not a Hardware Company anymore. You have to take a different look at these companies today than you did a year ago. Taylor thank you so much, art hogan. Thanks for joining me. Still ahead, we look at chinas booming music industry. One name has become a hit, but is chinas regulator a fan . This is bloomberg. Taylor now to a story we brought to you earlier this hour. Palatine has filed for an ipo. It is the latest in a string of Tech Companies who may live to join the Public Market this year. York, wee from new give you a cool 13 minutes to breeze through this. What do you make of this . Investors are waiting to see what the numbers would look like. We sing about six booming dollars raised this year. A lot of those companies are up, but then you have uber and lyft and their performance is not been that good. As expected, palatine numbers show that this company is obviously not profitable, but the revenue is growing very fast. Their total Revenue Growth in the past couple of years was up 99 , and 100 110 year on year. 195. 6ses last year were million. Taylor and you say thats up from the year before. So losses are growing and interestingly, in the statement they say we expect to incur operating losses in the future and may not achieve or maintain profitability in the future. As you look at pellet time and some of the other deals you cover, what is concerning, the fact that they are saying that may not be profitable . Flex investors have to figure out if that is worth buying into it anyway because these are highgrowth companies. They are choosing not to be profitable for now. They are pulling in revenues and once i get to a certain level they can probably start to make some profits, but as you say, its concerning when a company says please by our shares but we may never be profitable. Theyre obviously not going to be giving a dividend, either. An offering size of 500 million, but that could just be a placeholder. Some big names involved, what does it look like . Nabila the 500 moving dollars is just a placeholder, as you say. The companies will be valued at probably around 8 billion. We will find out how much they will actually look to raise from this. Taylor thank you for joining me. Story, Tencent Music is under investigation by chinas antitrust authority, according to sources who say the pro could end exclusive licensing deals. The company has been working with some of the Biggest Record labels. Joining me is lucas shaw who covers all things streaming. How concerned is Tencent Music today . The concernld say is moderate. On one hand, its never good to have regulators looking at you across the online media landscape and in particular in music. Tencent Music Services account from anywhere from 50 70 5 of the streaming market in china. The investigations outcome would likely result in them not striking an exclusive deal. Labelshe big record licensed to spotify, pandora, apple. A lot of those services dont operate in china. What they do is sell tencent the exclusive rights and then tencent sub licenses it to other companies and makes them all suffer for some bad deals that it made. Taylor what has tencent said in response . Lucas so far, they have said very little. I think theyre waiting to see how it plays out. The investigation started earlier this year in january or february. A lot of the people we spoke with said there is an outreach to Competitive Services and partners in march and april. There may be some outcome later this year. I guess is that tencent will try to keep a low profile until they figure out what this will mean for them in the long term. Taylor any idea what the music labels that are involved, what is their impact . Lucas they have a lot on the line because china is a market aat meaning years ago it was nonfactor for them. It has grown a lot in recent years. For that to keep growing, they need deals with all these services and that will have to renew their deals with tencent or make deals with rivals sometime in the next 12 months. Baidu. We have alibaba, they would be happy if instead of having to sublicense from tencent, which means they might not get all the songs they want at a given time, they could just make direct deals with record labels. I was based in hong kong for a few months last year and executives were clear they hated the structure because it gave tencent an advantage. They said they tended to benefit when they may deals with everybody because they had more transparency in their data. The downside of it the exclusive deal with tencent is that tencent has a lot of control over what happens with that music in a country where western music still only accounts for 10 15 of all listening. Taylor how much does Tencent Music mean to Tencent Holdings . But atits a big deal, the moment its a 25 billion 300any, and tencent is booming dollars 500 billion. Social apps are still booming for tencent. We chat is a super app where they want you to come in there and chat and watch video and music. Tencent has staked out a leading position in the areas of streaming video and music to make sure people never leave we chat. That was lucas shaw in los angeles. That does it for this edition of bloomberg technology. We are livestreaming on twitter. Be sure to follow our global breaking news network at tictoc on twitter. This is bloomberg. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy a new samsung note. Click, call or visit a store today. Paul welcome to daybreak australia. We are counting down to asias major market opens. Paul here are the top stories we are covering in the next hour. 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