Critics say its not enough. Porschetesla, the we will run down the features, including the price. Now, stop shares are plunging in afterhours trading after the company gave its first Earnings Report as a public company. Expectations for secondquarter revenue and earnings. It projected slower sales growth for the second half of the year. It willabout signal strong competition to make the Software Maker a rapid riser. We do is poised for a record low. Isning me from to discuss our guest and on the phone is our other guest. Larry, great to have you. We have had a few hours to digest earnings. Give me some of the big concerns. Is the big concern the Topline Revenue growth . That is something i dont cover. I work for technical professionals. I talked to the geek in the room, the i. T. Professionals about installing security. From my perspective, there is still strong interest for slack from our metrics, if you look at the inquiries we get and other metrics we get around research reports. Taylor if you say that there are some Strong Demand for slack, talk to me about the competition side, mainly from microsoft. It is pretty stiff competition. What microsoft is trying to do is push Microsoft Teams and this type of collaboration into the infrastructure. It becomes this horizontal service that everyone in the company has access to. We can tell you based on our surveys this past year that office 365 is increasingly being attributed to collaboration. In previous years, it was more associated as an email outsourcing surface service. Withcrosoft has succeeded teams, it has also succeeded in building awareness of the need for collaboration and the ability to collaborate more effectively in the cloud, which should indirectly help slack and increase interest in the market overall. Taylor i want to bring in our other guests covering slack for us at bloomberg technology. What happened to Topline Revenue growth . This is an instance in which slacks vest was not good enough. We had seen for years that slack was one of the most hyped unicorns in silicon valley. It has raised 1. 3 billion because of that anticipation and the stock went down 15 . It went down after the first pop in june. The company is decelerating. The revenueonsider forecast for fiscal 2020, which was just short of the consensus estimate of wall street analysts , or if we consider the growth in the number of paid customers and large customers, but for many metrics, slack is not growing as quickly as it once did. Of course, there is a law of gravity when it comes to these hot applications companies. The larger that you get, the more difficult it is to continue growing at the same rate, but slack is a moneylosing company. From an investor perspective, if you arent making money, you need to be growing. If you werent making money and youre not growing as quickly as we want you to, then we are a little bit concerned. Taylor do not only got the investor perspective, but you got off the phone with the ceo. What did he have to say to defend growth . Nico i just spoke on the phone with the ceo of slack in the cofounder, as well as the cfo. Basically, said, this is very strong growth for our business. The cfo echo that sentiment. They said that when you consider the amount of customers who are spending more than 100,000 each year with slack, so think of this as the largest businesses in the world, that number increased by 75 to 720. That is still a slower pace of growth and they are looking forward to current product that they have coming out right now, which they think will continue to improve things, but they are going to focus and tell investors on the earnings call, which just started, about the customer stories, basically. Tell them what companies are using slack. Date of seen lots of growth in europe, including germany. They are also seeing growth in the u. S. , they say. Essentially, they are sticking to their line of this is good enough, even as investors clearly are not happy right now. Taylor i want to bring in larry back into the conversation, because larry talked about the future of slack and part of that is bringing in some security tools. Is that a future growth area for them . How does that can compare with others . Larry there are two different families of products. One is slack teams, which you may be familiar with. The free version of slack. There is a pay version of that or you buy that on a workspace by workspace basis. Then there is the slack enterprise grid, that is the enterprise license product, where you can get all you can consume teams and workspaces. That is why talk to our clients about most often. That is where they are investing a lot into the security products, as well. They recently released a new desktop client, which handles more effectively a larger number of workspaces, so they are expecting some growth there. They are building in native mobile security features to kind of very similar to what into it intuit does with microsoft to control how the application behaves on a mobile device and to control the content that slack uses on the device. That is all good stuff to help them compete and build credibility with the i. T. Professionals i talk with. Taylor like you said, all good stuff. Certainly increasing competition. Thank you to nico and larry. ,s a reminder, Bloomberg Beta earlystage venture fund backed by bloomberg lp, is an investor in slack. Wasard business professor previously the Senior Vice President at uber. Within a year of going public, wework that it will add another director with a commitment to increasing the gender and ethnic diversity. It could begin a roadshow for its ipo as early as asked week. Coming up, 170 million. That is what google will have to pay as part of an agreement with the ftc for violating childrens privacy on youtube. This is bloomberg. Taylor another fine for google. Pay 170lans to million, most of the money will go to the federal trade commission. 34 million will go to new york state. Youtube has been failing to obtain parental consent in collecting data on kids under 13. Theiscuss, im joined by Vice President of net choice. Brody, whos is ben has reported on the story. Levy start with you. The fine does not seem like much. How big of a deal is this . Ben it is certainly easy for google to pay. It is a drop in the bucket compared to their annual revenue. It is a very large fine by the standards of children privacy, 30 times larger than the previous record, which came in february with tiktok, similar issue, collecting email addresses and names without parental consent on the popular teen video out. Video app. You have people who say this is not going to make a dent in the Google Business practices, but it is setting a record for the base. Taylor give me a break down, carl. What do you make of the fine and the ruling to limit some of the ads and commenting on childrens videos . Thanks for asking. Is 30 times larger than any prior fine. What surprised me so much was the fact that the ftc was evil even able to extract this fine, given the fact that they have gone well beyond the statutory limits of what the law allows. Youtube is a general lottery ands website. Every user on youtube says that they are over the age of 13. The terms of service say if you are under the age of 13, dont use you to, you cant use you to. There is really no there there for the ftc to bring the action. I think it sets a dangerous precedent Going Forward by suggesting that a general audience website is going to be decided by the ftc to be a child directed website and subject to the law. I would say for anyone who operates a website talking about harry potter or the avengers or anything related to children could be worried that the ftc may be coming for the next. Taylor to be fair, weve gotten a lot of pushback from members of congress. We have a tweet from a senator and i will read it to you. Senator ed markey saying that youtube knowingly broke federal laws, tracking kids to rake in advertising dollars without permission from parents, but the ftc let google off the hook with a drop in the bucket fine, not a single google executive or investor will batter and i. What bat an eye. What you make of that and the reaction from senators frankly . Carl senator markey should know what the law does and does not allow, since he helped write it back in 1998. Under the law there are two ways you are subject to being under it. You are a child directed website or you knowingly collect from people under the age of 13. Youtube did neither of these in this case. I think for a lot of people who are saying it is not enough, i think for a lot of those individuals it will never be enough. Whether the fine was 170 million or 170 billion, it will never be enough for a lot of people who fundamentally dislike these platforms and their right to give us free services. Taylor ben, what do you make of the end of that tweet that said not a google executive or investor willbat an eye . Wereoogle executives they happy about it and what is the read through two other competitors . Ben the market certainly shrugged it off. Google was trending up a little bit all day. Out andube ceo did come outlined some of the changes they are making. This,re or less welcomed a little bit of a chastened tone. More or less was saying this was something they were ready to do after some consultation. I do think it is important what carl is saying. Youtube was going to its advertising partners and saying, look at all these children you will be able to reach on our website, so it does seem like there was some knowledge that the ftc was able to demonstrate in its complaint, but the question is, will they be able to demonstrate that in the example of an overthetop streaming service . It is essentially the same thing, a company that provides a platform and then you have content creators who are able to appear on that. If one of those is the studio putting out harry potter, does the streaming service need to worry . Same thing with a connected device, they need to worry if some of those apps are kids apps, but it is generally a Smart Speaker that is general audience . Taylor i imagine we will find out and you will keep us apprised of the developments. Carl, and ben, thank you for joining me. I want to stay with google because there is another story that caught our eye. The tech giant and its allies are making a late bid to water down the first major data privacy law in the u. S. According to documents attained by bloomberg, they are seeking to carve out exemptions for digital advertising. A lobbyist for google recently distributed new language to members of California State Legislature that would amend the California Consumer privacy act. As currently drafted, the law limits of google and other Companies Collect and make money from user data online. It is due to kick in in the next year and there are only a few more days left to amend the law. To discuss, im joined by our correspondent. Thank you for joining me. Put simply, we know why they want to water down the law, frankly, because that is a big source of revenue. My next key question is are they successful . So far, no. This is that a debate going on for years now and it has just now struck the California Legislature because of this first data privacy law in the united thinks going through. For the last couple of years, they have been in testing insisting that the need to be exemptions for target advertising in order for them to maintain this very lucrative business model. Attempts to pass legislation to create an exemption was stalled in a Senate Judiciary committee and in this lastminute effort, they have yet to find a sponsor to push it through. It does not mean the argument is over, even if it doesnt exceed succeed in getting to an amendment phase and signed by the governor by the end of next week, there is still the end of this year and the First Six Months of 2020, when they could wrestle away some sort of to legalize the target advertising. Taylor any specific exemptions or changes that really struck out at you . There there are a couple that are interesting. All of this relates back to how they aggregate your data. Much of it according to the cc pa cannot include personally identifiable information. Google is looking for ways to collect data through your browsing habits that dont directly tie back to you as a person. One of those ways would be to collect data on a website where you visited and then to analyze that under a pseudonym and what they would then be led to do is take that data and perhaps distributed to a competitor of that original website for them to use and monetize. Or more broadly speaking, they want to change small sections of language like this business purposes defined as to instead say it is defined to include. That provides some leeway for Business Practices to include what they need them to include in the future with less regulatory oversight. Taylor thank you for joining me. Coming up, apple begins to borrow with billions and billions of dollars squirreled away. The iphone maker heads back to the bond market. That is next. Bloomberg technology is Live Streaming on twitter. Check us out and be sure to follow our global breaking news network on twitter. This is bloomberg. Taylor what do you do when you have nearly 200 billion sitting around . You go back to the bond market. For the first time in nearly two years, apple is raising money via highgrade bonds. The offering is coming in five parts, the longest of which is a 30your security. Its only more, we are joined more by molly smith, who covers Corporate Bonds for us. Why . They dont need the cash. They dont, but so do a lot of other companies that have been in the bond market this week. One investor told me, the kind of company want to lend to lend to is the kind of company that does not need it. That is why apple does so well when they come to fond Fund Shareholder returns. In apples case, they are such a good company to invest in and they have great cash management, that they keep renting. Taylor one thing you will say on the bloomberg terminal, you will see cash again, with a 200 billion, and some of the debt outstanding. When you talk about use of cash, you mentioned shareholders. How much of this would be going to pay down debt or Fund Future Acquisitions . Molly they dont break out the terms for us. It could be any of those three. It could be capital expenditures, anything under the sun of what they said. ,f you are a company like apple when you are looking at the 30year bond, compared to their outstanding debt, it comes out to be more than 7 million saved annually in interest expense. This is awonder broader question, but it pertains to apple. They are highgrade. We hear some of the lower Grade Companies have been doing really well because you cant get anything as an investor, your aa, aaa bond is frankly 0 . You have seen a lot of money flood into that highgrade area. Is there still demand for a aa apple bond . Molly everywhere. Yes. I think i heard the books on this were up beyond 20 billion for what they were doing. This is very well subscribed. If you look at the broader macro picture right now and the negative yielding debt in the world what is the number . Nearly 17 trillion. Apple bonds coming in around 3 for 30 years look great compared to that. Taylor we have on the screen the different trenches. Idea if an investor would be willing to go out 30 years or is there a little bit more demand shorter in on that duration, given frankly we dont really know where the fed is going from here or what that means for different maturities . Molly we did see this price already and it did look like there was a lot of demand skewed toward the longer side. 1. 5 billion was in the 30your part, so plenty of people going well out the curve. Taylor how does that compare to previous years . How to spreads now compared to the last time to came to market. Molly it is not so much about spreads as it is about yields in this case, because treasuries have rallied so much. Spreads have been fairly flat so far this year. But we see the red rally in treasuries with the trade tensions and the fed expected to keep easing, that is why we have seen so much issuance at the longer end of the curve. Taylor we talk about the 30year. I want to bring up another chart on g tv. T is an optionremoved spread this is basically where the 30 year yield, the 30 year bond price is done. Apple not rallying as much. Maybe rated like a qualcomm. What do you make of this . And these highGrade Companies that have done well, but maybe not as well . Molly when you are looking at this on the spread basis, it can be a little harder to see the whole picture because so much of what we have seen so far this year in Investment Grade has been really all about the treasury rally. That is why Investment Grade debt has been the bestperforming asset in fixed income this year. Returns a 14 . Last year, we were down 2 . This is a massive turnaround. Taylor great time for apple to come to market. Thanks, molly. Coming up, 2020 elections are around the corner. Big tech is looking to ramp up security. We take a look at a meeting with the fbi next. This is bloomberg. Devices are like doorways that could allow hackers into your home. And like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. This is bloomberg technology, im taylor riggs. Trade were between the u. S. And china has finally hit apple. President trumps china tariffs were entered into the federal register on friday, dragging the largest u. S. Technology company into the fray. Some are saying investors are looking to software as opposed to hardware due to the trade war. Bic president says tariffs are having less impacts on i. T. Spending than was originally projected. I spoke to him earlier. Compared to the headlines versus what has been happening, tech spending has not actually been not significantly affected as a function of a lot of the tariff cost. A lot of that has to do is to where we were in the tech cycle. Tech is infused in the economy now. In our work lives, in the infrastructure, in how we entertain ourselves. And a lot of markets, there is a huge data center buildout and service spending, Storage Spending was really high. Infrastructure spending was over 20 . If we had gone back three years and we thought Infrastructure Spending would be 20 , no would no one would have taken that seriously. That muted the spending impact with the tariffs. We saw 9 growth overall last year. Taylor where are we in the cycle now . As you look forward to the rest of 2019 or 2020, are we in that cycle where we can still start to see tech spending . Or are we starting to see it play in . Crawford we are starting to see that shift now. We are starting to see where customers are starting to take a pause. They are starting to lock up and say, we cant run our business by these little bits of information that come out. We have to really understand and be able to understand the longterm impact of imposed tariffs Going Forward. So, what we have seen is we are starting to see a deceleration and were seeing a deceleration in spending overall, but it is primarily that we are seeing customers start to take a pause, but we are starting to see that the infrastructure buildout companies are starting to take a step back from that and starting to slow down overall spending. Our expectation for spending this years roundabout between 4 and 5 . Taylor when you talk about customers, there are hardware customers and software customers. It appears software has been relatively insulated compared to hardware. Is that accurate . Crawford absolutely. We have to remember this as a Service Economy and what the longterm impact of the Service Economy is. It really becomes something that impacts are much more muted in terms of overall spending. Companies dont necessarily move away from the salesforce. Com subscription, but you can say to your employees, we are going to make you have your pcs for five years and were going to push the Service Interest server infrastructure out. Hardware is the first off that gets muted. Smartphones is something that really gets muted, because it is not that hard for a consumer to say, im going to wait another year before i buy another smart on. Taylor what i really like about your Research Note was talking about the competition of spending between the u. S. And china. China much more a hardware economy. , the u. S. A software economy. Where are you seeing their Hardware Companies starting to slow down . Support the hardware economy because they know they are dependent on it . Crawford this is a fascinating trend. If you look at the overall i. T. I. T. , half of chinas spend is associated with hardware products. The u. S. , that is closer to 20 . What we call the top of the stack, applications, services, those are not area where china producers do as much business compared to the bottom of the stack, things like semiconductors, pcs, assembled hardware. In the most recent quarter, we saw some fascinating trends. You are seeing this move toward nationalism. C up. Ee h3 you see huawei up. You see dell down. This is the server growth in china. It is the chinese vendor that is getting favored by the local economy. Storage, think anything. The market in china was up 7 . Huawei up. Dell down. Ist you are seeing in china easy the local brands are the ones that are being supported, either through government directed contracts or through companies that are relatively close to the government and want to buy the national brand. Taylor on the flip side, are u. S. Software makers relatively insulated because they are not getting the impact of hardware that has been most affected to date by tariffs . Crawford they are. The u. S. Software companies are in a really nice spot in the soul trend because there are not because therend are not Chinese Software competitors. It is difficult for them to see a Significant Impact because of this. Software is a service. We have also seen a lot of the Service Providers or the large Service Providers in china start to resell western software to global multinationals in china. I was there a few years ago and there are white label deals that happened where you are seeing western Software Brands sold by Service Providers to companies in china who want to buy western software. That is the impact of muting piracy and not seeing as much piracy because you have to buy it as a service legitimately. Taylor that was the president of idc. 2020 Election Security with the subject of a meeting between facebook and google executives and members of the u. S. Intelligence community. This is according to a person familiar with the talks. With details, i want to go to kurt wagner in san francisco. Any idea what was that in that meeting . We are told the conversation was basically to prepare for 2020, Start Talking about the biggest threats these Tech Companies and also these intelligence agencies might face, and also to set up some kind of plan, so these different sides can come together and have a more open line of communication. After 20 when we found out russia started to showing people that these two sides are coming together, to work together. I mentioned this earlier, but that was a huge problem in 2016, not everyone was talking to one another. Part of this is a demonstration everyone is on the same page. Taylor good as we had ever closer to that election. That was kurt wagner. Taking on tesla, porsche powers of its own electric sports car, but will it be enough to charge pass the model 3 . We will discuss next. This is bloomberg. This is bloomberg. Markshion retail app posh is delaying its ipo until next year. They will focus on boosting sales and improving execution. Is a recent posh mark resale marketplace for highend clothing. The company had hoped to go public this fall. Porsche is getting into the electric car market. They just unveiled their all electric vehicle. 90,000start at a cool with the top price of nearly double that. Volkswagen is hoping this will help cement its ambition to be the leading seller of batterypowered vehicles. Matt miller caught up with the porsche ceo to see what is under the hood. It is an exciting moment for us, to be able to present the new vehicle. Four years of engineering. Preorders andof it raced to nearly 30,000 preorders. We are very proud of it because all of these porsche fans have not already seen the car before today wection and so will mention what will happen in the market and what will be the response. Matt we trust the design language and the dynamics of porsche. What can you tell us about the financing to build the car . You are the first carmaker ever to develop a car partially with a promissory note. How did you come up with the idea, how did that work . , when we did the calculation electromobility, you have the material cost, you have the investment you have to put in, and when we thought to calculate the product, we asked all the people in porsche to help to be able to finance the project. Took part to be able to finance the project. [indiscernible] it was the first time in the Automotive Industry doing this. ,t the end, it was successful being able to produce the car in germany, where the heart of porsche is, where we produce the 9 11 and the 718. Matt will you always make the car in germany . Is that something your customers demand . For our brand, it is very important. Having cars designed in germany, engineered in germany, built in germany, it is a very important argument, and we thought to go to a new era, we should do it where porsche comes from, where 365, 56, thenirst , and11, now the taycan connecting our traditions with their future. Matt this will likely outsell the 911. The starting price is about the same. 90,000, 90,000 euros is somewhere in the ballpark of a base 911. Did you have to sacrifice a lot of margin for that . We started first of all with some of the and service projects. Come withit will somebased products around 100,000 euros or dollars. We have still a good margin. It is not so high as in other projects that we have. We see the taycan as a starting project for a new mobility and there was a lot of potential in the future for innovation, but also for economic scale. Taylor that was the porsche ceo speakingoom blume to matt miller. To talk about this new electric vehicle, lets talk to chester dawson. Frankly, the photos look incredible. How cool is this new electric vehicle . I think they nailed the cool portion. The question is how many fires are going to line up buyers are going to line up for it . It has been widely anticipated and it made a big show of it with the debut in niagara falls. Theepresents a big bet company is taking on the future of the auto industry. They are really partially decoupling from the gasoline engine, which has gotten them to idea they are to this new of electrifying vehicles. In the next six years, half of all their vehicles are going to have an electric plug. Taylor talk to me about the price point. Starting at 90,000 is almost triple teslas model 3. Are the going after a different customer or is the price point something that tesla should not be worried about . Yes, it is more a direct competitor to the tesla model s. In fact, it costs more than that, you were talking about north of 100,000 for the taycan. The model s, it has variations, but it is about 100,000, give or take. It is a much more highend vehicle, a bit more niche, clearly for a very wellheeled buyer. The model three, the premise was that it was more of a massmarket vehicle. It is still very pricey, but this is more it is more in line with porsches strategy of being a luxury vehicle maker. It is going to be very interesting to see if it can take on the model s, which is an older vehicle now, several years since its last full update. Taylor what does this mean for volkswagen and future plans in the electric Vehicle Market . Chester well, it does represent kind of a beachhead. Has as part of its settlement for the Diesel Scandal been building up infrastructure for charging stations across the country. It has deals with walmart. It is basically building the infrastructure to support vehicles like this, so clearly they are leveraging that. In some sense, this is kind of a down payment on that future. It remains still unclear how much demand for electric vehicles there is, particularly in this country. Clearly, for some highend buyers, it does have a certain appeal and the taycan is a very sexy car. Taylor talk about this country and largely the electric Vehicle Market is in china. How concerned are some of these automakers that china electric vehicles sell for the First Time Ever in july . Issue, it is a big because i think the industry was counting on china to lead the way. It has to be said that that is part of an overall downdraft in the chinese auto market. It is not just electric vehicles. It is going to throw some water on the idea that chinas growth is just going to keep powering the industry, particularly in the electric vehicle space. It has may be given some ause aboutxecutives p how aggressive they can be in defending on depending on the Chinese Market to be there is a core source of demand. Taylor wonderful. Chester dawson, hopefully getting a test drive. Still ahead, gold is on the rise. What does this mean for crypto miners . The future of cryptocurrencies next. This is bloomberg. S is bloomberg. Taylor a canadian businessman is wellknown for finance everything from elms to Mining Companies films to Mining Companies. , and made lions gate millions founding goldcorp. He has turned to another form of gold cryptocurrencies. Invested in blockchain technologies. Bloomberg sat down with him and asked the state of the crypto market. Take a listen. I was curious about that sector. I thought the was a place and i still think there is a place for cryptocurrencies, including bitcoin and all of these things. My only concern with thisocurrencies is that is a personal opinion and i set it to many of my friends if cryptocurrencies ever become a threat to any sovereign currency , they will be eliminated somehow. You cannot eliminate gold. It is physical. It is global, it has been around 5000 years. It is true money. There is a difference to me between crypto, which has a little bit more risk than the physical gold. That idea of for a while there, gold was not moving anywhere ugly desk quickly in the mining world in the world of raising capital a lot of people got excited about Bitcoin Mining startups financing that. Is that sentiment changing because of his rapid rise in gold . I think it is changing somewhat. I think the main reason it changed for cryptocurrencies is because they came off their highs. We got lucky. We just happened to launch it at a moment in time when bitcoin 5,000, 6,000 all the way to 20,000 in a matter of months. What we did, which i thought was intelligent to do in that environment, which was to raise a lot of money and by a lot of the mining operations, which give it a solid base. We raced around 200 million and put it to work. It collapsed immediately and it took everything with it. Taylor that was the Lions Gate Entertainment founder. Wednesdays surged after the price target was raised on the stock to 185. That is the street high. Roku has been affirmed in a buy rating. He further noted that one in every five u. S. Households had a roku run set in 2018. It has soared more than 70 since early august and over 500 since a december low. That does it for this edition of bloomberg technology. It is live on twitter. Check us out and be sure to follow our global breaking news network on twitter. 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. The following is a paid presentation brought to you by rare collectibles tv. Announcer the California Gold rush is considered to be one of the most impactful events to affect the economy during its first 100 years. It has had a longlasting impression in numismatic history as well. The people of california needed a way to standardize the value of the new gold. They set up offices