Transcripts For BLOOMBERG Bloomberg Technology 20240713

Workers are not celebrating. To infinity and beyond. Richard bransons Virgin Galactic could be the first Space Tourism business to go public. We will analyze demand. But first, top stories. Alphabet earnings. The report was impacted by heavy investment in googles Cloud Computing business. Google has been Building Data centers and hiring sales people for its cloud unit that runs services over the internet. Joining me, our correspondent from bloomberg intelligence. Cloud is all the rage, potential for future growth. What did you make of it . Like you said, they are spending. They are showing results. What we are seeing for the next year, they will take the center focus and you will get success here and they have the capacity to compete. Microsoft. And you will see this being a bigger deal for google but at a cost. Taylor what is your take on keeping up in the Cloud Business . It will take continued investment as we just said, but there is a huge potential for payoff. Taylor i want to talk about the statement it looks like Topline Revenue in the bottom line revenues is this a revenue problem or an expense problem . Its not a revenue problem. We see search becoming more and more valuable on mobile. This is offsetting the 18 . The wall, the volume of ads youre seeing. I think the business will keep humming, but the Cloud Businesses where this could be a bigger deal for them next year. At scale, they are a very profitable business. Google has the scale. If they can come out and show the exposure look, this is how fast we are growing, it could spur the company. Taylor i just got off the phone with the cfo who said it was the messy quarter. But there are changes in accounting and mark to market. Some of those losses are on the income statement. She would not specify that uber and slot for the companies. Is there a real impact to the Venture Capital arm of the companys that lead to the bottomline relative to where you think they should be . I think thats possible. My biggest take away for google, we do focus on the ad side and the expectations for their at revenues and although cpcs are declining a bit, the individual clicks are way up. I think its a really good sign for the bottom line. Taylor last week we sat here and said the same thing about amazon. But that ad business is so strong. How mature are their ad businesses . Mobile search still has room to grow. As the results show, its a very valuable franchise for the company. So we expect that moment to continue their. Google will show more results on that front. Youll see this dynamic playing out which really plays well for both companies. Theres enough room for the three of them to enjoy good growth, but disclosure for both companies on amazon and potentially google could make the difference. Taylor you had a good note on this that ad revenue accelerated into 2018, have a little slow down in 2019. Did this order give you enough . Give youis quarter enough . Are there still pockets of worries, lets say . I think ad pricing improving in general would continue because they are market share leaders and this is a mature business, but this is enough room on the mobile side to keep this moving at a healthy clip. I asked specifically about youtube. Theres arguably outside the cloud, it could be a big future growth area and she reiterated that saying we are excited about the upside potential. Are you getting enough off and outlook going into the next few quarters to be confident that could be a driver. I do think that youtube will be a driver. Advertisers are very keen to spend on video placements. Youtube is the number one place to do that. But there is been controversy a lot of times by you to. About youtube. Theres a broader concern about data privacy and misinformation. Whats the Downside Risk . The Downside Risk is more on the profitability side. The momentum and advertising will continue to be strong. But because of the shared infrastructure, if you look at the cost profile individually, sir would bes search would be significantly more profitable. I think we will keep on the topline but as far as disclosure is concerns, we do not think the numbers would be disclosed anytime soon. Cloud is a real potential. Taylor nicole, finally, we know that google is enmeshed, as all bid big tech is, with china. They are looking for growth, not commenting on the trade fights or operations in china. What do you make of anything headwind as far as it comes to the macro environments in china and the trade fights . Nicole googles biggest headwinds have to do with currency fluctuations. As far as china they are not super invested. Any issues with china may affect them much less than in the u. S. Like manufacturing. Taylor thank you both for joining. Now investor the fake meat maker beat analyst expectations coming in at 92 million on net revenue and raised their outlook. Distribution channels are also key to grow. Beyond meats first earnings after going public. If you like Bloomberg News, check us out on the radio. You can listen on the bloomberg app, bloomberg. Com and in the u. S. On sirius xm. This is bloomberg. Taylor microsoft shares rose to a record on monday after a major bit three securing a milestone. Securitng victory in a milestone. The contract unthinkable for microsoft even a year ago will likely come and it cost, legal and internal. Bloomberg is learning that there will be a challenge, citing president Donald Trumps interference in the bed project. Amazon had widely been considered the front runner. To discuss, were joined by bloombergs naomi nicks was been covering this and dana bash, who covers microsoft. How did microsoft do this . We are all trying to figure out to what extent it was the involvement of President Donald Trump and to what extent it was microsofts own bid. The last couple years, microsoft has been improving its cloud offerings. They built data centers that were appropriate and overall, they have been expanding globally. They also have a long history of government contracts. Microsoft worked with the federal government for a long time. They generally been successful. Taylor now me, from the pentagon, the d. C. Angle, was the advantage of amazon over of microsoft over amazn . On . Microsoft has been a longtime contractor with the dod. The dod uses amazon products currently in its office suite. There was some synergy in terms of microsoft ability microsoft disability to say, hey, we know how the government works. And we have the technical capabilities to meet the demand youre looking for. Taylor naomi, you bring up an interesting point. Is it healthy to have competition, amazon with the cia, microsoft with the dod, or is it better to have synergy with the same company echo the same company . Whats the perspective from d. C. . Naomi Security Officials have been quite divided. It has been quite controversial. People in industry of said, with think the dod another publicsector agencies should be not putting all of their eggs in one basket and they should be using multiple cloud providers in the dod has tried to allay concerns, only relying on the jedi for their Cloud Services and saying we have smaller contracts that could go to other companies and then you have others within the dod you say its really complicated. Taylor what does an amazon challenge look like . The gao has 100 days to respond to it. They could also file a lawsuit. Will that be successful . Or there could be a possibility like know me mentioned that they will naomi mentioned that they will generally corporate customers have one cloud that they rely on. They are increasingly moving away from just the one. There are people in congress who would prefer to see more than one here as well. Taylor naomi, to be fair, the Government Accountability office, i believe, came out and said this deal and the approval process withdrawal the appropriate controls. If amazon more to challenge, they are confident they raised the bar high enough. But what else are they saying about what the challenge could look like and if all the controls were met echo met . Naomi the gao previously ruled on a protest from oracle and oracle alleged there were conflicts of interest that give amazon the edge. The gao has not said anything about any claims amazon might make in regard to the fairness of the jedi cloud contract. Within the dod, there has been an Inspector General looking into the contract and they recently came out with a statement that said, hey, we have not seen anything thus far, but we are awaiting the final results. Taylor not only was microsoft facing the pressure, but internal pressure . What are the employees internally protesting . Dina an Employee Group posted an anonymous letter asking the company not to bid. That same the contract. They are upset that microsoft is just betting abetting. It. S participating in they think this amounts to microsoft helping the government improve the lethality of its Weapons Systems and they dont want to be part of that. Whether they will take it further than tweets, whether there is anything internally, a walkout, Something Like this, so far the company as responded saying, look, we believe we should be supporting and supplying the u. S. Government and u. S. Military. The company says they respect that some employees may feel differently and told the employees that they should seek to work on other projects, but were talking about microsofts weakest cloud system. Its biggest clouds business. The pentagon has another contract for which the Microsoft Office cloud will be considered. It is becoming harder and harder for microsoft to find jobs that are not tied into these contracts. Taylor thank you for joining. Spotifys debut on profits. We have the story next. And Bloomberg Technology is Live Streaming on twitter. Be sure to follow our global breaking news network on tictoc on twitter. This is bloomberg. Taylor apple has announced Noise Cancellation air pods. They will be released october 30. Each earbud will ship with three different sizes of your tips that conform to different ear shapes. They cost 249. And google has reportedly made a takeover offer for the maker of wearable and wireless fitness devices. Theres no certainty a deal will happen. Neither google nor fitbit is commenting. And in northern california, wildfires are pleasing out of are blazing out of control. Almost 200,000 people have been forced to leave their home spirit of the same time, pg e is slowly restoring power after the biggest deliver it blackout deliberateest blackout ever. 2. 7 Million People have had their electricity shut off. The blackout has been aimed at keeping power lights from starting more fires. In shares of at t are rising. The company won praise from the activist investor Elliott Management for its new threeyour plan. The telecom promise to do much of what elliott had pressed for. And then spotify shares moving toward the ipo in april. The company Beat Estimates on subscriber growth this quarter. Spotify has 113 premium subscribers. They are keeping rivals apple and amazon in check. Joining me on air, i want to talk about apple earnings. What did we learn . Intense focus on the cloud. This has been an obsession. Google has seen 20 revenue increase. And this has been about the cloud. That business really significantly increased. They have been broadening the Customer Base and whats interesting, if you look at the breakdown, that little bar refers to other, which includes cloud, includes hardware. They are looking to the future when it comes to revenue. Taylor all things out of that and google. That was ed ludlow. We will hear from Richard Branson next. This is bloomberg. Taylor this is Bloomberg Technology. Im taylor riggs in San Francisco. Lets focus back on the thing. Alphabet shares fell in late trading after reporting thirdquarter earnings. Results largely impacted by the heavy investment in googles Cloud Computing business which is trying to catch up with rivals like amazon and microsoft. Later this week, we get numbers from apple and facebook. They report Quarterly Earnings on wednesday. Joining me to discuss it all is ed ludlow. Walk me through alphabet and google. Ed cloud is the future and they are making that clear. Back in q2, sundar said we expect this to be an 8 billion annual business that can compete with amazons aws and microsoft. 8 billion is about a quarter of what aws makes for amazon, but there is still growth potential. They are moving away from this core advertising business. Today, that has been an incredible engine for growth. 20 growth on revenue. Taylor a chart we are showing to the audience really highlighting the strengths that is the revenue relative to everything else. They are so dependent on ad revenue. Ed they have been. Quarters of 20 plus annual growth, that may be slowing down a bit. In the first quarter, there was a miss on revenue that had concern about the future of the advertising business. Now in the third quarter, there is so much talk about the cloud, how much they are investing. They put a lot of money into this business unit. They are hiring like crazy. For them, they feel like they can be competitive against amazon and microsoft. There are other areas as well. The pixel 3, this cheaper handset, compared to the rest of the market. Taylor on Bloomberg Technology, we like to push it forward. Wednesday, apple and all eyes on how the first early numbers from the iphone 11 sales are going. Ed this quarter will include the first shipments. The estimate is around 42 million units, a decrease from the same quarter last year. This is the quarter before holiday season. Fiscal fourthquarter for apple, but the course of the holiday season. Apples reliance on the iphone and handsets, moving away from that towards the services business. There has been 10 calls on the stock this month alone. Part of that is optimism about traffic through apples u. S. Stores. There could be a surprise even though the estimates are low. Definitely keep an eye on services. They bundled in apple tv plus with the purchase of a handset. It is about as much getting existing users to get more products and services than it is about getting handsets to new customers. That is where we will be looking. Taylor ed will be following all of those earnings for us. Cant thank you enough. Billionaire Richard Bransons Virgin Galactic holdings became the first publiclytraded Space Tourism business on monday. The listing was carried out through a merger with a shell Investment Company that was already trading. Virgin galactic has been running for the 15 years without yet achieving a first commercial launch. Yet, Richard Branson and ceo George Whitesides shared their enthusiasm of the public trading debut on Bloomberg News earlier monday. George we have been flight testing these vehicles for now nearly 10 years. We believe we have an architecture that is extremely reliable and also has aspect that are very suited to the customer experience. For example, taking off from a runway, landing on a runway. Those are things that will have a smooth start and ending to the customer experience. On rocket motors, the simplest, thus safest rocket motor for our class of rocketry. For all these reasons, we feel good about the systems. Richard the rocket can turn off in a seconds notice which is key to the safety. Ed coming back to the issue i understand why celestial travel gets all the buzz, but surely, there are good commercial applications on earth. How much will the company be focused on that, like hypersonic travel between cities . George the exciting thing is the commercial stake is a massive business now. Over 375 billion annually, now growing to an expected total of 1. 5 trillion. This is really the first time people can invest in a peer play commercial flight company. We will be focusing on building out this terrific highmargin business with human space like offering from north america and mexico. We can have even bigger markets, which is a 200 billion per year. We have a very exciting near term future. Ed richard, you have been in this race for a long time, obviously competing against big names. Jeff bezos and elon musk among them. What is the first mover advantage here . Richard i think we have the advantage of having already put these into space. We have made five new astronauts. There have not been any others made on u. S. Soil since 2009. We have a tested and tried system that is performing well. We are building, using the money we raised today, we can build a lot more spaceships and other ships, a lot more rockets. We can build the numbers of people able to go into space. Ed what does a typical customer look like . George we have a wide range. There are some folks that are really inspired by the Apollo Program or space in general. A lot of people want to do the next big adventure. There are some people interested in the perspective change they will get into space. Some people just like the virgin brand and richard. We welcome them all. People do it for different kinds of reasons. We think there is a tremendously big market. You go to talk to people, three quarters, eight out of 10 people actually want to go to space if they can afford it. Ed talk to me about that. The price point george for sure, the price point initially is a fair amount of money. The only other way to go to space right now is to buy a ticket with the russians and they are charging about 85 million. It is a dramatic price decrease. Long term, our hope is to go down. Near term, the price will probably go up a bit because it is actually underpriced. Our vision is to bring the cost down some more and more people can experience the wonder and joy of human spaceflight. Ed richard, last question. You have been at this game for a while. Something that is going on in the home country, brexit is dragging on and on. What do you think is going to happen first . Getting tourists into space or the u. K. Successfully leaving the European Union . Richard i very much hope we will have tourists in space, many, many, many years before we even consider leaving the European Union. My thoughts have been wellpublicized. I think it is the saddest thing that will happen to britain and europe. Im hoping another referendum will be allowed because all the polls show people have realized they were misled and they will vote overwhelmingly to stay as part of the European Union. Taylor that was Virgin Group Founder Richard Branson and Virgin Galactic ceo George Whitesides speaking to ed hammond. Yes, branson was wearing the spacesuit system. We are checking in on envoy using checkins to transform company offices. Now, they want to be in on the smart office revolution. Thats next. This is bloomberg. Taylor now to our work shifting series where we look at how technology is changing the nature of workforces across the globe. Our next guest began his career at google at the ripe old age of 18. He then went to twitter before deciding to start his own company to try to transform office spaces. San franciscobased envoy is doing that by using office checkin systems in 13,000 lobbies across 70 different countries. You can find its use Companies Like american express, yelp, spotify, nike and more. For more, lets head to detroit where envoy ceo larry gadea is standing by. Great to have you. Give me more of an update of what your company is doing. Larry thanks so much. Yeah, we are trying to make workplaces work better. There a ton of different monday and things people put up with. We are trying to rethink all of this. We started in a very simple visitor signin product that people saw everywhere. They were excited about it. And they brought it to their own company. That is how we got to 13,000 Companies Using it today. Pretty excited about this and now we are taking on the rest of the office. Lots of different products, lots of different areas. Taylor i want to talk about the different office. We know you have nailed the checkin process. What are you doing to make the office a smart workplace . Larry think about this. In your home, the kind of had this old thermostat that got transformed into something beautiful, much like the nest thermostat. It just kept on going. It got connected. It would measure when you are home, when you are not. All the Different Things that would make your home a really great place is now interconnected. We want to do that with the office. We want people to come into the office. A visitor comes in, they sign in, they go into the meeting room. It welcomes them. Maybe if you are in the meeting room, you can extend that time as well. The future is a place where you are not worried about the daytoday, mundane stuff and that is what we are working on. Taylor with all of this comes heightened scrutiny over data. What are you doing to keep data safe . Larry lets think about where signin was before this. People would go into somebodys office and there is literally a logbook that would be on that front desk. You can see everybody before you. Our company, what you literally do is trying to bring people away from that. We are trying to make it better so now it is on an ipad. You would sign in. It is one person at a time. That way you dont see everybody elses information such as driver license info. You being in a facility, you have access to all of your facilities around the world. If you have 100 offices, you can see signin information from 100 different offices your company would own. A very good way to provide power for bigger enterprises. That is just the one product. When you think about everything together, that added convenience and power brings a lot of things you could do. Taylor a few weeks ago, i interviewed a gentleman and he had an allremote workforce. How much of a headwind is that to your business as we increasingly move to more remote . Larry great question. Generally, people will want to see and work with other people. We have workplaces because it is a lot easier to collaborate. Not every job and not all the time, that is true. Even now, data showing 3 or 4 of people work from home. So, it is still a pretty small percent. I dont see that change anytime soon because inherently, people want to be with people. We are going to make that area even better for them. Taylor larry gadea, ceo of envoy. Thank you. Still ahead, facebook fallout. Employees of the social network are not happy about facebooks decision to let politicians lie on the social network. Thats next. This is bloomberg. Taylor the price of bitcoin flirted with the 10,000 mark over the weekend. It might have china to thank for that. This comes after the chinese president called to keep china very forefront of Blockchain Technology last week. A senior financial official called for special attention to be paid to blockchain. To discuss that and help us kick off San Francisco blockchain week, galen danziger, the cto of mousebelt, a Blockchain Accelerator and ecosystem. You are in the accelerator, in the midst of it. What i love is you talk about how the crypto world right now, the fundraising environment is broken. Why . Galen we think a lot of projects were able to raise money very easily and the incentives were not correct for them to deliver on those. Like, projects needed something beyond just investment. They needed extra help from their investors and support to actually push them to deliver a product. Taylor another thing that was really interesting, you said any startup could succeed if it is given the right tools. A backer that can see the project through. How much of that should it be . Not every startup should be accessible. Why do you think a backer could come in and see a company through, that that alone would help it be successful . Galen we think of a startup has a really strong idea but is missing a few of the things to get into the next phase, get the product to market or get it built, that is somewhere where in investor or team can help them out and push them to that phase. Taylor in the introduction, we talked about how volatile bitcoin has been. As you take a look across the crypto landscape, does that volatility help or hurt . Galen so, in terms for projects that have raised money and used bitcoin, volatility does hurt it. Though as the market has taken a dip, it has also helped wean out projects that maybe there was not enough of something to them. Taylor i want to get your take on what zuckerberg has said about china with regard to his libra cryptocurrency. Take a listen. We have a soundbite. Mark as soon as we put out this white paper on libra, what we saw was in china especially, the immediately kicked off this Publicprivate Partnership with some of their Biggest Companies in order to race to build a system like this quickly. 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 he is really highlighting that if we dont act, china will. Is that a real threat . Galen absolutely. I think the u. S. Has failed to supply sensible regulation for projects in this space to build on. If you compare that to other jurisdictions, projects collaborate with legislators to create laws. Here, they end up looking over their shoulder trying to figure out what the laws are and if they will be subject to them in the future. Taylor what does smart regulation around cryptocurrencies look like . Galen exactly Something Like a regulatory sandbox or open discussion about what rules should be and what should be enforced. Currently in the u. S. , it is not that. Taylor very interesting. Galen danziger, thank you for joining. Now, facebook employees are speaking out over the companys political policy. A letter from employees to Mark Zuckerberg obtained by the New York Times reads Misinformation Affects us all. Our current policies of factchecking people in Political Office or running for office are a threat to what facebook stands for. We object to this policy as it stands. It does not protect voices, but instead allows politicians to weaponize our platform by targeting people who believe content posted by political figures is trustworthy. For more, i bring in sarah frier who covers facebook. What do you make of that statement . Sarah i think it is really hitting on zuckerberg in an interesting way because zuckerberg is talking about we saw him in georgetown last week. We saw him in the halls of congress saying it is all about free speech. That allowing politicians to speak on issues the matter what they say is important for the marketplace. Employees are hitting back and saying it is not about censorship at all. It is the way facebook itself amplifies certain ideas, allows people to pay to have their message known. Allows people to target very specifically who their ads can reach and when those ads reach a very small audience of people who are likely to be receptive to them, there really is not a marketplace of ideas checking the politicians on those comments. So, i think it was a very smart internal look at the ways that facebook not just allows speech, but amplifies it. Facebook does not have this happen at its company. Its a very transparent, open workplace where people are constantly talking about all the issues that affect employees. Ive never heard of a letter to executives of the signatories like this. It is a really big deal to see them Say Something so formal. Taylor do you assume that facebook coming out and saying, well, we will review the way the ads are presented so it is very clear if this is a political ad or not does that not go far enough . Sarah it does not address the complaints employees have. Certainly the way the ads are designed and labeled is one of their top complaints. But they also want politicians to be treated the same way as others on facebook. Any other advertiser on facebook, you cannot lie on your ads and it gets taken down. Facebook is not want to be in the position of having to decide if something is true and they also say they shouldnt have that power. At the same time, by stepping back and not taking any action on those ads, they are allowing lies to spread and are ok with it. There has to be some middle ground. I dont think that based on the employees pushing back, but also we have seen elizabeth warren, joe biden, others pushing back at facebook. They will have to make some sort of move on this. It is unclear what. Taylor amidst all of this, all the antitrust scrutinys, data privacy scrutiny around facebook, they are coming out with a Preventive Health care update, if you will, that reminds you to maybe get a Blood Pressure test or not. Why is facebook coming into the Health Care Sector . Sarah facebook wants to whatever facebook does, they want facebook to be more useful to the people who are using its products. Not just for connecting with friends and family, but also for getting the news, for getting to sell their couches on facebook marketplace, for messaging, and now for health. I think this is another area that they can potentially move into to give you another reason to check your facebook. We should think about it that way. I think that Health Providers are very important to facebook in that they are big advertisers. Really, this is trying to do something for users that kind of aligns with what they would need in their lives. If facebook is the internet for people across a lot of the world. Taylor quickly, the company says it will protect data that you enter. Is that trustworthy . Sarah it is always going to be bad optics when facebook announces something that probes deeper into our personal lives given all the privacy scandals of the past. It does not really matter what they say about how data will be used. Their past history will cost them consternation and concern among users. Taylor sarah frier, thank you as always for joining. Finally, word late monday, tiktok owner bytedance is mulling a Hong Kong Ipo as soon as the first quarter, according to the financial times. Tiktoks valuation has considered to soar past that of baidu. Late on monday, we learned that Tesla Ceo Elon musks Defamation Case will head to trial in los angeles in december. You may recall musk asked the judge to throw out a defamation lawsuit by a british cave diver he called a pedophile. Musks lawyer says the twitter attack was part of a schoolyard spat on social media. Musks Defamation Case will head to trial in l. A. In december. That does it for this edition of Bloomberg Technology. Bloomberg technology is livestreaming on twitter. Check us out technology. Follow our global breaking news network, tictoc, on twitter. This is bloomberg. The game doesnt end after that insane buzzer beater. Because with Nba League Pass on xfinity you can watch the out of market games you want all season long. And with the allnew xfinity sports zone, you get everything nba all in one place even notifications about your favorite teams. Watch the dropped dimes, monster blocks, and showstopping dunks. Plus get instant access to your teams with the power of your voice. Thats simple, easy, awesome. Say Nba League Pass into your voice remote to check out a free preview. Dont miss out. This is bloomberg daybreak middle east. Optimism about a trading would china and Solid Earnings boost sentiment. Over theghi hands reins of the ecb to christine plea formid one final better fiscal policy across the euros. And hastens toin trigger a snap election in the u. K. Will he have any luck when he gives it another shot later today