Zuckerberg describes libra as complex and risky. More on his testimony effort of a House Committee wednesday on capitol hill. Plus, tesla reports Third Quarter earnings and shares spiking on a surprise profit. We have the latest. And cloud carries clout. Microsoft First Quarter revenue beats the highest analyst estimates. Demands come in strong but may be waning. We will explore. First, to our top story. Facebook Ceo Mark Zuckerberg fielded questions from the House Financial Services committee on merits of its plan to establish its own digital money called libra. While he struggled to convince them of facebooks plan, he did share one major view with lawmakers. Mark this project is too big for any one company to do on its own, which is why we set up this independent Libra Association with other companies and nonprofits. It is a very complex project. As you say, it is risky. Taylor for more, we head to washington, where our own kurt wagoner was standing by. Whats your first takeaway . Kurt people still do not trust facebook. That was the overarching theme from the questions we heard today. A lot of the feedback from members of congress was basically pointing out things that facebook has done wrong in the past and asking given your track record, why should we trust you with libra, with money, with a new cryptocurrency . At the end, it was representative mchenry after almost six hours of questions and testimony that said im not sure we learned anything new here. It was a little bit of an unfair blanket statement but at the same time, i think despite the fact that we had all this time to hear from Mark Zuckerberg, we did not walk away with a bunch of Big Questions answered. Taylor kurt, when pressed on why we should trust facebook, what was his response . Kurt well, a lot of the response is similar to the clip you just showed, which is the idea that facebook is just one of 21 Different Companies that libraw overseeing the cryptocurrency. Facebook is putting out there that we are not the only people making a decision here. We want to work with regulators and we want you to tell us how this is going to work. It is not going to be only our call. That is obviously a very important element of all of this because for the people who think facebook has too much power or it cannot be trusted, the idea that they are bringing others into the fold or that they are following rules that someone else creates, that will give them a lot more flexibility to get this thing off the ground. Taylor kurt, we heard him also bring in china and saying if we dont do this, china will so we have to do this to get ahead. We have a sound bite from what zuckerberg was saying about china. Take a listen. Mark as soon as we put out this white paper on libra, we saw in china especially they immediately kicked off this Publicprivate Partnership with some their Biggest Companies in order to race to try to build a system like this. Enimbi that they could use as part of their belt and road initiative, their foreign and Economic Policy to grow influence throughout asia and africa and other areas. Taylor kurt, is zuckerberg right in bringing in china here or is he just playing to all of our fears about china taking over . Kurt i think there is probably some validity to this concern. This idea that there are companies and the government in china that really wants to accomplish a similar problem. They have the technical ability probably to do Something Like this. I do think this is a very convenient argument to make especially right now and especially in front of this Congress Given all the issues we are dealing with with china. With the trade war and all that. It seems like now is the time to play up this fear that china is the real threat here. We heard him say this last week. When he gave a speech at georgetown about free expression, he talked about the internet rules and china and it and Tech Companies like facebook dont support free speech, you might look up and see the that is gone from the internet because Chinese Companies are controlling it. He has played on the china fear before. Taylor kurt, we also talked a lot about political ads. Remind us what you heard today from zuckerberg about why he does not want to be the arbiter of news and Fact Checking these political ads from politicians as we head into election season. Kurt he has been pretty consistent over the last week or so about the question that he has been asked many times. Weve heard him answer it time and time again. He says we dont want to be in a world where Tech Companies are responsible for determining with 100 certainty what is true and what is false. He says i dont want to be in that world and you probably as a Facebook User dont want to be in that world either. That obviously creates a lot of other problems but the general perception here is that facebook doesnt want to be taking a side and if it were to go out and say were going to block this ad from President Donald Trump or senator elizabeth warren, does that constitute them picking a side one way or the other . They want to let things slide and they are asking journalists and users to point out what is true and whats not. Taylor thank you for joining. Tesla is also out with thirdquarter earnings. 6. 3 billion dollars in top line revenue. Its the first decline since 2012. The stock is jumping. Tesla is managing down the income statement and posting bottom line earningspershare beat of 186 versus estimates of a loss of . 24. That is an unexpected profit. Eo joining me to discuss is jo securities. A surprise profit . Indeed. You mentioned the bottom line numbers already. The real surprise for us was the companys gross margin, which drove the bottom line numbers. Taylor what is the gross margin . What are we looking for and what do we get . We were forecasting 15. 1 . They came in at 18. 9 . For a company like tesla, that is a big difference and it surprised us. Taylor how surprised are we by the profit in the Third Quarter . We thought maybe it would be elusive for a little bit. Elon musk and the company have been saying that this is the big goal. They have been saying we got the production right now, we are all about getting costs down. Because tesla has been so chaotic over the last 18 months or so, you know, there has been a lot of skepticism but this is a case where they delivered. There is more money coming in than is going out. The cars are selling in greater numbers and when you look at what they have ahead, obviously aree are pitfalls, but they shanghai factory and in shanghai. That will potentially be great for sales. The investor letter they just posted said they are ahead of schedule on the new compact suv model. Taylor we know from a lot of these companies that you cannot cut your way to growth. The problem here is that Topline Revenue growth is falling for the First Time Since 2012. While you are able in one quarter to manage and get a bead on the bottom line, how concerned are you that going back to the top line, you are not seeing growth . I think thats a good question. Buys why we moved from a to a hold on the stock. We are concerned about the demand out there. Anding out the model y ramping in china is important. This company does need to generate growth. Taylor we should note that tesla an afterhours trading, they are poised for the highest since april. Clearly, investors are surprised and happy with the company. As we talk about profitability, walk me through the mix. The mix between the three, which is higher volume but lower xrgin versus the s and the and production of the y. The model s and model x have been the highermargin luxury vehicles. The three is a middle range car, upper massmarket may be. The knock here was the tesla had been doing these contortions to get the price down. Down to get it as low as possible. That was going to cut into sales of the others and destroy margins. What looks like to be happening been sothree sales have good and tesla has been so good at keeping the margins in check and getting their manufacturing process, which was so all over the place for so long, under and it looks like they are making the numbers work. At the end of the day, this is a much cheaper luxury car but it is still a pretty expensive car. You have these addons the tesla that tesla has been effective in selling including semiautonomous addons. Theres a lot of ways for them extra margin on this thing. X, a drop in revenue, does that show you that demand in the u. S. Is saturated . Im not sure i would say saturated. They have accessed most of the early adopters already. You are getting to the plan our getting to the part of the plan where you have to deliver reduced prices and better economics on the model three to keep the volume going. I think their rate of growth may attenuate a little bit until we see china come online. Taylor they just opened up the big factory in shanghai. They are looking at producing 1000 cars per week in that factory by the end of the year. Is that what you need to see out of the numbers from china to see that you are getting that demand . Certainly china helps. It sound like we are pretty close. That will help with the margin. I do think it will be very important for them to get the lineup of products refreshed in the u. S. And europe as well. So what we got surprised on today really was the gross margin. It is much more profitable than we thought. The concerns i articulated about demand and the rate of growth are still there. Taylor lets push this forward. So tesla coming out and saying they are confident they can still exceed 360,000 deliveries this year. We were looking for 360,000 to 400,000. How confident are we now that we can meet to that can meet that annual target . This is a company that is famously a little bit freewheeling. It is honestly hard to say. Them coming out and putting that out there, you have to take that as a good sign if you are an investor. A lot of this future growth as joe was saying is dependent on china. China is very politically chaotic right now. Obviously, tesla has done well and has opened the factory with remarkable speed. There are beautiful pictures of the factory that are in this investor letter they just posted. With anything with china, you have to look at it as something you should be cautious about. Because at any point, the trade war, which obviously seems to be simmering down a little bit, could heat up again. We have a tech ceo doing car manufacturing in china. That is potentially politically sensitive. Osha. analysis from joe thank you both for joining. Coming up, microsofts cloud efforts pay off. The Company Beats annual assessments, but there are signs that demand may be waning. We get a full picture ahead. As we go to break, paypal exceeded analyst estimates when the reported earnings on wednesday. Paypal became the first to pull out of the facebook led cryptocurrency project. This is bloomberg. Microsoft reporting firstquarter results as well on wednesday. Joining me on the phone to discuss is jeffries analyst who currently has a five rating on microsoft. You have to hand it to the company. 14 topline growth and ninth consecutive quarter of doubledigit growth. How are they getting there . The cloud. They are crushing it. They accelerate actual cost and currency growth from 15 up from 14 last quarter. They have really embraced the shift to cloud. The cfo and ceo really got ahead of this ahead of anyone. They are taking shares of oracle, ibm and many others in the industry. We think that the momentum continues. Whats notable is they have massive backlog. Many of these contracts they are signing, they are not recognizing the revenue in the quarter, they are recognizing it over multiple quarters. The opportunity for investors is incredible because these are multiyear contracts that are now measured in the billions of dollars. That gives you future visibility. Thats why the stock continues to grind higher. I think its off a little given the overhang across tech right now with texas and the other Software Names turning off. Overall, you cant dream of a better quarter. Taylor our analysts would agree. Coming into this report, we had our analysts say microsoft was placed for the transition to the cloud even more than amazon. They are taking business from oracle and ibm. What are they doing that other Cloud Companies are not . They got to azure early. This is years in the making. I think the legacy vendors did not pivot quick enough. Secondarily, they added the whole microsoft suite from server products to desktop to new applications. They have been very opening about embracing new technologies linux, which in the past they were not open to. They have been agnostic to what is going to go on the desktop and effectively just saying we want to be the back end to support that. I think it has been great leadership and multiple years in the making. Honestly, they are reaping the success of years ago decisions they made strategically. Now, this is an off. They are gaining the trust of the top corporations and realizing that what they want to use amazon, they want to use google. They are using a lot of microsoft, too. Large enterprises are using a lot of amazon or microsoft cloud. This multicloud world continues in large enterprise. Theres really a couple choices. Taylor away from the cloud, are you seeing enough broadbased demand in some of their core businesses that legacy i. T. , that if cloud were to slow, there is enough support in the other business lines . They have an upgrade cycle to windows 10 that will wane. Its a tailwind. It turns to a headwind early next year. There will be some questions in the call about how much demand got pulled forward on the traditional pc side because you have an endoflife product. That is something we are watching but thats more of a rounding error and what is more important is the success they are seeing across the board in cloud. Taylor thank you for joining me. Coming up, Conference Calls, tequila, plans to live forever. Uman era ofw bizarre excess has come to an end at wework. How are employees feeling about a payout . This is bloomberg. Taylor its the end of one of dramatic business debacles in history. A 9. 5 billion package. The japanese conglomerate will get most of the startup. The weworkn, founder, will walk away with 1. 2 billion. Last january, wework had a 47 billion valuation. This valuation lists the company at less than 8 billion. 9. 5 billion . Walk me through the components of that. There is three parts. There is a 5 billion debt package. A 3 billion tender offer. It is available for adam neumann to use if he wants to sell back his shares. Then 1. 5 billion of accelerated warrant in which softbank is going to take more. Taylor if softbank is coming in at a lower and lower average price for their transaction, so if there is a payoff, they could win big. What are the other investors bought in at that the higher prices and are participating in the lower round of shares . This is going to be an ongoing conversation for wework and the details of figuring out the deal because you are right, softbank is doubling down on its ownership wework and buying shares at lower and lower prices. 1. 5cularly, if the billion end of the package is coming in lower than the tender offer. They clearly believe that if this could be valuable in the future they will come out with a win. At the same time, you have a lot of other employees and shareholders looking at this thinking how am i going to get what i expected this equity might be worth . Particularly for employees who joined when they got options, many of them are underwater. This came up in an all hands meeting today with the executive chairman of wework. Employees are concerned about how this is going to play out for them. Describe other reactions you got from the employees when they talk about these bailout packages. One former employee called it a platinum parachute. They feel like him walking away as a billionaire, to them it hurts and it feels painful that the company didnt even have enough cash to pay out severance packages for the thousands of employees they plan to lay off and meanwhile, adam neumann walks away with on top of his availability, a 185 million consulting fee which was explained to employees, that the was something they had to pay him to get him to agree to a noncompete and remove himself from the board. Taylor during that all hands meeting, executives came out to say they emphasize profit over growth. At this point, one would hope. When we get there . That is a big question up in the air. It seems like the company feels like it needs to act quickly to try to show profitability but to be honest, this the company that was losing almost 1 billion the first half of this year. So in order to turn things around, they will have to make dramatic changes and i dont imagine it will happen overnight. This is the new mission of the company. Its no longer growth at any cost. They have turned that over. Taylor finally, do they feel like the ship has stabilized . You had a lot of executive departures and some frustrated employees, they have come around and said thanks for hanging in there Going Forward. All hands on deck, we are trying to boost morale. Is that working . If you are an average employee, you are still concerned if youre going to have a job in a couple of weeks areas they confirmed layoffs are coming and they wont talk about when but we know its soon. Its going to be a major part of the company that will no longer be working there. So morale is low. We have talked to people who say people are just not showing up fortheir job their job. The internal channel is lit up with employees frustrated about how is this happening and they are still skeptical about the future and you cant blame them. Taylor thank you for joining us. Coming up, its all back to facebook. Mark zuckerberg may be done with testifying today but lawmakers are not done with facebook or its proposed cryptocurrency. More fallout from wednesdays hearing next. This is bloomberg. Taylor this is bloomberg technology. Im taylor riggs in san francisco. Back to our top story. Facebook Ceo Mark Zuckerberg is defending his social network before congress. Lets listen to some of wednesdays exchanges between zuckerberg and lawmakers. Is it a currency . Are you a bank . What is this association . Mark its a very complex project, and as you say, its risky. Do you consider libra to be money . Mark i consider libra to be a Payment System. So its like me having my money in Wells Fargo Bank . Mark you could think about it that way, although we are not a bank. We are not applying for a bank charter. But thats the problem. Mr. Zuckerberg, thats the problem. That is what we are facing here. Mark my commitment is we are not going to launch the libra Payment System here or anywhere else around the world until we get the approval from the relevant u. S. Financial regulators. The american competitiveness angle and competition with china is a National Security issue. China especially. They immediately kicked off a Publicprivate Partnership with some of their Biggest Companies in order to race to build a system like this quickly. Will it be possible to conduct anonymous transaction using libra . Theres a whole host of problems. Will libra allow anonymous transactions . Mark like i said, its an open question. It is pretty hard to stop anonymous trading. Have i missed something . Mark congressman, i think this is probably more of a policy issue in question. As your code currently exists, can you transact anonymously with libra . Mark congressman, it certainly would be possible to build a system that would allow that. I want to ask you a very simple question. Mr. Zuckerberg, are you a capitalist or are you a socialist . Mark congressman, i would definitely consider myself a capitalist. Frankly, i am not sure we have learned anything new here. Taylor joining me to discuss in washington, managing partner and cofounder of federal financial analytics, the washingtonbased advisory firm. Also in washington, the Deputy Director of the open markets institute, sarah miller. Karen, let me start with you is there any more trust with regards to facebook and libra today than there was yesterday . Karen i think nothing was answered other than the commitment that libra will get regulatory clearances before launching, but from home, how how, and if the product exists after that i think is still very much to be determined. It was a promise but not one with any specifics, any timing, or in my opinion, any clarity. Taylor are the problems not about libra but the fact it is libra and facebook and that facebooks name is attached to this project . I think that certainly does not help. There are two takeaways from the hearing in my view. One is that libra is toast. Number two is that Mark Zuckerberg got roasted. Like, you know, he did not do himself any favors here. The idea that regulators in the u. S. Or around the world are going to allow Mark Zuckerberg to potentially undermine the entire u. S. Financial system is highly unlikely at this point. So i dont think he did himself any favors at all, and it just opened him up to being a punching bag from both the right and left on a whole host of issues that went far beyond libra. Taylor karen, you chuckled a little bit when karen said that libra was toast. Do you agree that libra feels a little bit dead on arrival . I said before that i think this is the worst Product Launch ever, and that is counting the new coke. The reason for that is because they did not understand a very fundamental fact the payments system, currency, financial transaction, its about other peoples money. Social media raises a lot of privacy and many other issues, but youre putting economic quality on the line when you start taking other peoples money, and i dont think to this day Mark Zuckerberg or facebook get that. This is different. Congress told him that today from both sides of the aisle. Im not really sure they get it now. Taylor sarah, zuckerberg brought up china and said, if we dont act, china will. On this announcement, china already started making some of their digital cryptocurrency gains in the market as well. Is that an accurate statement, or is he just playing to our fears about china taking over . Sarah i think absolutely the latter. A few years ago, right, we saw facebook trying to find and create new censorship tools so they could launch in china. So there is no real principle here. The talking point was actually rightly called out by one of the members in the hearing today, which was encouraging to me, saying like, look, i dont think this is about us choosing china or else having to choose Mark Zuckerberg. I dont think that is a real choice. And he is absolutely right about that. Zuckerberg should not be up there saying, if you dont let me do whatever i want, china is going to take over our economy. Economy. That is absolutely silly. We should not be modeling our economy after the chinese state. Taylor not only did we hear about libra, but we heard a lot of commentary today about political ads and facebooks decision to produce and take and promote political ads regardless of if they are fact checked or not. Take a listen to what he had to say about that. Mark we believe people should be able to see for themselves what politicians are saying. That does not just go for trump. That goes for any of the candidates for any of our national offices. People need to be able to see for themselves and be able to make judgments on what the candidates are saying and their character. Well, i applaud you for that and i dont want you to be bullied by politicians to relinquish our treasured free speech under the first amendment. Protect it and dont be bullied by politicians who want to censor politically incorrect speech. Taylor karen, let me get your reaction first isnt that smart . We dont want big tech deciding what is news, what is not, what is true, what is not. We want them to stay out and just be the platform, correct . Karen well, we do, but Mark Zuckerberg says he wants voters to see what politicians have to say for themselves. I think the concern is a lot of what is on facebook is other people pretending to be the politicians and speaking for them and speaking inaccurately. The difference, i suspect, at least the one that troubles me a lot, is facebooks responsibility not just to be open to free debate but also open to fraudulent, deceptive, and even criminal discussions or misleading, doctored videos and so forth. That im not sure is protected. We had sarah, Christopher Wiley on this program a few weeks ago and he said facebook is like a highway. They built the highway, so it is their job to create rules around it. Do you agree . Or should facebook just be the platform on which politicians can post ads and facebook doesnt have to fact check . Sarah our view is that the solution will require action by congress and federal agencies and the solution is not to kind of weak things around the edges. Facebook built a business on surveilling users and using that data to manipulate them. It is inherently discriminatory and extremely dangerous for democracy. It should not be a Communications Platform that millions and billions of people around the world use that can also kind of supercharge this , manipulative content. It is a Business Model question. Its about how they make their money, and it is not sustainable in a kind of democratic society, and it is as simple as that. That will require congress and others to drop it. Taylor when you talk about their Business Model, what is the case that facebook should stick with their core business, and fix it, which is the crux of the problem, at least when it comes to the election . Sarah yeah, i mean, certainly they are in a position to do more on this, but at the same time, karen was right. We do not necessarily want facebook censoring what everyone is talking about. That is not the role for Mark Zuckerberg in a democratic society. The Business Model itself is deeply problematic, and it will have to change at some point. That is what these antitrust investigations can start to move towards. Mark zuckerberg said that the 2016 election clearly had caught them on their heels. Do you feel any more confident they are more prepared for 2020 . Karen no. [laughter] i wish i could say yes. No. I know that just last week, they shut a few folks off, but this is a very wily enemy. I agree with sarah. There is an inherent conflict between facebooks advertising, surveillance, data manipulation Business Culture and an honest, free, fair election. In the old newspapers, the ads for new cars were on different pages from the political commentary. Now it is all mixed up and its hard to tell which is which and whats true. Here, when we wrap up did you see a different Mark Zuckerberg today . Was he more prepared, calmer, more mature than the last time he testified . Im so old asking me if he is more mature is an unfair question. I think more fundamentally, does he understand what is going on . Why libra . Why is facebook under such scrutiny . I dont think so. This is not the regulatory question. Its part of it, but it is really a structural issue. Sarah has pointed this out. This is a new Business Model with vast reach. Now it is a reach into money. The Payment System is anachronistic. Mark zuckerberg said today that the Banking System is i think he said stagnant, and that is true. It has not been innovation. One of the reasons for that is the rules. Because its other peoples money and you dont to move fast and break things if the things you break are other peoples life savings, and he doesnt get that. I dont think he does. Taylor wow, what a roundtable. Thank you both for joining me. And coming up, tesla roars. Reporting a surprise profit, topping wall street estimates for the quarter. We talk to an analyst from wedbush. This is bloomberg. Taylor tesla shares spiked in after hours trading after the Company Reported a surprise Third Quarter profit. Ceo elon musk took to twitter, of course, less than an hour later saying he was super teslas team for great execution. With more on the earningspershare picture, margins, and what the company is saying about china, and analyst an analyst from wedbush securities. Come into my terminal. The story of the day has to be those margins. Is the margin picture for you what you needed to see this quarter . Look, thats the key. I mean, if you look at the margins and profitability, that is the major feather in the cap of the bulls. And i think that is the surprise. This is something they need to deliver, margin to the folks and profitability. This should be a potential game changer for them Going Forward. If they can maintain this, this could be a potential game changer for them Going Forward. Taylor the problem is you cannot cut your way to growth. If you are seeing a topline decline for the First Time Since 2012, is it sustainable to cut your way to growth . Opinion, that is going to be the challenge for them, to navigate profitability while they are trying to get to growth, fix what is happening in china. That is going to be the key in the Conference Call, major Short Covering that youre going to see, but that is really the key navigateand tesla to Going Forward. The revenue of picture has been the competition we have talked about between the s, x, and y, and the model three, which is the lower margin. How do you feel about the composition . With model three, that is going to be the difficulty to get there from a margin perspective. Y is going to be key going into 2020. That will be a big focus on the Conference Call as well as china and the gige three build out. Taylor you brought up the Conference Call. What is your biggest question to management . Lighting profitability, what does it look like with the china buildout and what does sustainable demand look like next year. That is going to be the key for musk and tesla. This is a major positive for the bulls. Is it sustainable . That is what they need to show in the Conference Call. Taylor as you mentioned, all eyes are on 2020 profit. I show you another chart im looking at inside my terminal, and it is a similar story, which is Free Cash Flow. We are getting positive Free Cash Flow, but is it sustainable . Dan thats the point. I mean, will they be able to sustain Free Cash Flow and will they will they have to raise more capital . They took that off the table today in terms of these numbers, but as we have seen with tesla, it has been a one step forward, two steps back story. That will be the key Going Forward. Taylor are you confident they can produce 1000 vehicles a week in shanghai by the end of the year . Dan im not confident in that. Thats going to have to be delayed. That will be a focus on the call in terms of china. For tesla stock and production demand to go higher, it all depends on giga 3, and that is going to be a focus in terms of what the timing looks like in china. Taylor price reaction, 10 , 20 in afterhours trading. Is that warranted . Dan i think it is more a massive Short Covering. No one foresaw a profit this quarter. You will see a kneejerk reaction. The stock is going to get rerated higher. A 20 move in my opinion is overdone. We would be a seller of that move. Dan, we speakow, about profitability, and lo and behold, lyft comes out this week and says they will post surprise profitability by the Fourth Quarter of 2021. Your take . Dan that is really what investors need to see. I mean, they need to get to profitability quicker. More and more pressure for lyft, i think its the right move to announce that. Right now, investors are not looking at nonprofitable stores. Tasha stories. Stories. They need to show the path, and it is something they will talk about in their Conference Call next week. Taylor and how much of this, when we talk about uber looking at margin expansion, lyft howting for profitability, much of it is management for the company, looking around at the environment for growth where growth at any cost frankly does not work anymore and they are saying we better get a grip. Grip . Dan it is a public company. The pressure has changed. For uber, a lot more pressure. Remember, lyft is only a domestic player. What continues to be a massive overhang in the stock is the legislation in california. That really continues to be a very fluid situation that is an overhang on both lyft as well as uber. Taylor and i see your coverage of lyft. Uber ifo ask you about we can. We did have a story saying that ubers u. S. Margin expansion fts margind ly expansion in the u. S. Do you agree with that . Dan i agree. I think right now theres a lot of pressure on these companies in terms of managing profitability. This is a learning season for lyft as well as uber. Right now, investor credibility is really small in terms of what you are seeing on these stocks, and they need impressive quarters and guidance Going Forward to move. Taylor wedbush analyst dan ives, thank you for joining me. All things tesla, lyft, uber, and profitability. Still ahead, the streaming wars continue and apple wants to be on top. We discuss apples plan to gain the top spot in a crowded market next. This is bloomberg. Taylor shares of apple hit a record high this week. Morgan stanley has raised its price target to the highest on the street. The firm calls for apple to hit 289 a share mostly on next months release of the apple tv plus. That implies a 20 upside from tuesdays close. And sticking with apple, the tech giant is buying its way into hollywood with a massive jet for tv plus a budget for forlus a massive budget tv plus. Its streaming Service Debuts next friday with original shows starving celebrities like Reese Witherspoon and jennifer aniston, but apple is positioning it in a highly crowded market. To discuss, i bring in Bloomberg News reporter chris palmeri. What is your general take away about how crowded this market is . Where does apple fit into that . Chris it is very crowded and getting more crowded every day. There are already dozens of streaming services competing for customers. There will be more launched over the next year. People saying the most a customer will subscribe is maybe three or four, so there will be both a mad gold rush and a big shakeout over the next couple of years. Taylor chris, i want to show you a chart that i am showing our bloomberg guardians audience. You know the story. You have been covering capital. Total cash, a few hundred billion dollars. Net cash of 108 billion. If anyone can take on netflix or disney, is it apple, frankly, because they have the cash . Chris that is sort of one of the ironies here. Certainly, apples brand name, cash, customers all around the world, it would seem to be the most formidable competitor, but at least in terms of hollywood, it is kind of the least feared, and that is because its strategy does not really has not come into focus. Netflix made original content based on what its most popular shows were its most popular shows were, directors and actors. Apple does not seem to be that focused. They just seem to be paying top dollar for wellknown celebrities, which is kind of the mistake people make when they come into hollywood. Taylor chris, netflix had a great strategy, which was original content. Disney , when they launch, they will have all of this backlog of old content they can push forward. Any sense that apple will be targeting original content . Any sense what apple will focus on . Chris they are focusing entirely on original content and people will tell you, it is original shows that make the difference if you look at the surge hulu has seen in the last couple of years, but you cannot do it with just that, which is one of the most perplexing things about apples strategy. With all the cash they have, why dont they buy a library of movies . Go people just going to to see this one movie or two shows that they are launching . It is a very confusing strategy for a lot of people here, but we are all watching. Taylor chris, finally, quickly here, very interesting in terms of strategy, tmobile had been offering customers netflix. Verizon has been offering customers disney plus. Any sense that apple really does just go it alone, or do they partner with someone . Chris well, they have their deal. Basically if you buy an apple product, you will get a year of this new service, and a lot of people think that is really what this is about, linking the hardware to the content. Taylor bloombergs chris palmeri, thanks for joining. That does it for this edition of bloomberg technology. Bloomberg technology is livestreaming on twitter. Echnology. Ut t be sure to follow our global breaking news network at tictoc on twitter. This is bloomberg. Hey. Hey. You must be stevens phone. Now you can take control of your home wifi and get a notification the instant someone new joins your network. Only with xfinity xfi. Download the xfi app today. The following is a paid program. The opinions and views expressed do not reflect those of bloomberg lp, its affiliates or employees. The following is a paid presentation brought to you by rare collectibles tv. In a letter dated 1904, to the secretary of treasury, president Theodore Roosevelt wrote a short letter. And this was in typical Theodore Roosevelts direct, bravado style. My dear secretary shaw, i think our coinage is artistically of atrocious hideousness