Transcripts For BLOOMBERG Bloomberg Technology 20240713

But is the custom sound System Company showing trademarks of a takeover . We will talk about the survivability of upstarts in the big tech era . Breaking news. U. S. Treasury has named no currency manipulators in its fx report, effectively taking china off of being a currency manipulator. Again, the u. S. Treasury has named no currency manipulators in its foreignexchange report. We know that china was put on that designation list in august, being removed today. I want to get back to our top story. It is all about earnings season here. The big banks set to report earnings this week after having spent billions on technology in 2019. That could be bringing a big change to the bonus culture as traders are being forced to unlearn some of their most basic assumptions about making money. Joining us, our Bloomberg Finance reporter. What are we learning about unlearning the bonus culture on wall street . What we are unlearning is that bonuses or maybe a thing of the past. In the past, traders were always judged as these big players in the markets who could make outsized bets and outsized profits and money on the back of that. Now, because of electronici fication, the machines are doing the work for them so they cannot garner that kind of paycheck anymore. Taylor we joke about this all the time, instead of going back to cfa school, we will go to coding school. Lananh what traders are trying to do now, at least the smart ones, trying to build in the transition for the future. While they may never be heavy quant sort data scientists or phds in physics, they need to get up to speed, whether it is algorithm trading or electronic trading. It does not mean that they are going to write the code, necessarily, but they have to have some fluency with that topic. Taylor even though quans and traders of that type are in high demand, it is not necessarily translating into a raise in composition in compensation. Why the discrepancy . Lananh a recruiter i spoke to said that even though quans are in very high demand, that does not necessarily mean that the salaries and bonuses are going to come up in any big way. There is an emphasis on cutting costs, which means that the basic level of skill you have to have will require more technical skill. Taylor do you think this is just the beginning of what looks like a broader structural change undergoing the Financial Markets at this point . Lananh i do. A lot of the experts have said the same. The pace of financial innovation and movement is going to continue so if people want to stay relevant, they need to learn, up skill, and make that transition. Taylor any other reaction from the street . Lananh a lot of emails from traders saying, i wish i had gotten up to speed, and maybe i should take a class or something. There have been a lot of soulsearching emails. Taylor can you remind us of size and scope . How many jobs have the potential to be automated . Lananh the people i spoke to have not really said because i think it is too wide to quantify. There is not a precise number. Equities, foreignexchange, a lot of these markets that are highly electronic are already seeing this change. On top of that, everyone is talking about the bond market as well. Those are the most intuitive markets to see this transformation. Eventually, this could head into Investment Banking as well. Taylor we will continue our coverage of Bank Earnings all week as the numbers come in. Visa has agreed to buy plaid, a network that makes it easy for people to securely connect financial accounts to the maps to the apps they use. Visa will fund the deal with cash and data. There is expected to be no impact on the visa previously announced stock buyback program. Coming up, we will talk to one of the biggest Hospital Systems in the u. S. My conversation with the ceo of providence Saint Josephs health from the Health Care Conference, next. As we go to break it more headlines. The u. S. Has removed china as a foreign currency manipulator. They are citing their foreignexchange commitments. China has made some comments on currency, according to treasury secretary steven mnuchin. A semiannual foreignexchange report. Again, holding talks with the pboc on currency since august. Originally putting them on that report in august, now removing china as a foreignexchange manipulator. More details as we get them. This is bloomberg. Taylor the intersection of health care and technology is never more important than at the j. P. Morgan Health Care Conference going on this week in san francisco. One of the biggest Hospital Systems, providence Saint Josephs, announced a partnership with microsoft in july. Its ceo rod hochman joins me now with his predictions for health care in 2020. One thing that stood out on your list was Health Systems starting to prioritize digital access. When it comes to care and collaboration with big tech, why do you see that as a prediction . Rod what people expect with every other service in the economy, they expect to get on the app, make their appointments, do that. We are seeing this big revolution in the digital front end of health care where all people want to do is figure out who their doctor is with a couple of clicks. Taylor who are the biggest disruptors and do those disruptors continue in 2020 . Rod there are a list of them. I think Everyone Wants to do health care. Walmart, amazon. Plus, there are a lot of startups working particularly in the ambulatory space. I dont even worry about my traditional competitors anymore. I really think about all of the electronics startups around us. We have to figure out how digital front end to make it easy for our customers to get in touch with us. Taylor do you view amazons early entry into the race as a threat or a motivator . Rod that is a good one. I think both. There are certain things we will do with Companies Like amazon. With our microsoft arrangement, they really wanted to help us make Health Care Better and not necessarily compete with us in health care in the future, it is something we are working on. Taylor data privacy, and i wonder if big tech is doing enough to protect Health Care Data . Rod you said it perfectly. We are very worried. One thing our patients trust us is with their data. They dont want to see us giving away their data to someone else. We have been very protective about that relationship. We are looking to protect partners that will understand that. We think the difference is that the consumer has to be in control of their data and they have to be a partner. It is not just that i will give up my data and hope something happens. I think the consumer wants to be a partner in this Data Transfer and understand what protections they have. Taylor how do you see voice assistants working within the Health System . Rod one of the biggest problems today, if you have gone to see your doctor recently, most of the time they are head down on a mouse or keyboard and not making eye contact. We think getting information through voice will be critical for clinicians. Their biggest complaint is about the Electronic Health record and particularly about them having to be data entry clerks. So they will really revolutionize the way that tool works. Right now, it is too clunky for both the patient and doctor. I think voice activation is one of those things that will make it better for the clinicians out there. Rod our thank you to rod hochman, ceo of providence Saint Josephs health. Lisa gill is the head of Health Care Technology and distribution at jp morgan. She has been a leading member of the Research Team met jp morgan for about 16 years. I asked her about the role of companies and how they play in the devolution of health care. Evolution of health care. Lab corp. The integration is more between medical and diagnostic. Marrying it together with a lab company, they have done really well in being able to do patient recruitment, bringing new technology from a medical perspective to the marketplace. Teladoc is one of our favorite names on the telehealth side. The cost of the services. They announced an acquisition yesterday of a Company Called intouch. This creates a broader platform for them to be able to touch people in the hospital, at home. They have a great relationship with cvs. Taylor as you look at Companies Making heavy investments within ai, how are the they poised to be a distruptor within health care . Lisa when you start thinking about making decisions around health care were Artificial Intelligence can play a part, valuebased care. We have to move away from feeforservice to valuebased care. If you are a diabetic, what is going to happen to you next . Not just for me physical perspective but how about a mental perspective . That is where Companies Like teledoc come into play. You can get the help to walk through not just your physical ailments but your mental ailments. Taylor were the threats of amazon entering this space overblown . Lisa this will sound strange but i think amazon coming into any space is good for these companies. They make Big Investments to compete and it makes them better and smarter. When you think about a platform like amazon, really tailors to the consumer, a lot of b2b companies, how they will put technology in the marketplace. Taylor do you feel like that makes Companies Better off now than four years ago. Lisa you have had a consolidation. Youve seen cvs come together with aetna. United health care has a massive platform. A lot of that is because of competition in the marketplace. Companies like amazon, the threat of an amazon, really creates the opportunity for companies to think about these things differently. Taylor when we think about some of the big issues in this space, drug pricing, transparency, medicare for all on the democratic platform, how is all of that forcing Technology Companies to look at the way they do business . Lisa there are a few things. Drug pricing, we believe you should price the drug correctly, there should be a price for innovation. At the same time, egregious drug pricing has to go away. We are seeing drug pricing that is mid Single Digits right now. Transparency. At the end of the day, you should know what you are paying for. Medicare for all, i dont think it is as simple to get medicare for all done as people believe. Even if we have a democrat elected to the white house, most likely, the senate will remain republican and it will be difficult to come up with bipartisan support. Taylor that was my conversation with lisa gill, j. P. Morgan chase managing director. Coming up, what lies ahead this year. This is bloomberg. Taylor netflix feeling the oscar nom love. Two of nine films nominated for best picture this year. The irishman and Marriage Story giving netflix its best shot yet for winning the tom the most coveted price. Last years roma was seen as a favorite to win the best picture oscar but lost to green book. A call comes as alphabet continues to compound on its defensible dominance in search and video advertising. Our next guest has taken a look back on the digital ad space where he says things look positive, with the strongest uptick belonging to google. Joining me, Pivotal Research Senior Analyst Michael Levine, who currently has a buy rating on alphabet. What did your ad trends in the last few months show you about how google was best poised to outperform . What i think you are talking to is the pivotal advertising insights product, where we survey about 55 large agencies and large marketers. What we saw, over the course of the quarter, was pretty clear increasing ad loads in terms of the shopping products, and on youtube. We were pretty shocked when we saw the significant improvement in r. O. I. For the third quarter, not only versus the third quarter. When we looked at the q4 versus the q3 seasonality, it seemed pretty pronounced. Taylor another stock you mentioned that is poised to outperform relative to consensus is snap. Snap frankly has been struggling. Right now, trading at 18. The median price target on the street is only about 19 per share. What is snaps angle here. How do they stand out against so many other big competitors . Michael i think their execution has gone from being relatively lackluster to exceptional. A change, the cfo from amazon, the chief sales officer, jeremy gorman, also out of amazon. Really putting much more consistent best practices industrywide into the company. Hearing good feedback from the agencies, becoming more relevant, showing up more consistently on plans. Into 2020, it was one of the ideas we had highlighted as one of our favorite for the year. Taylor where does that leave amazon . Michael on the advertising side or in general . Taylor yes, advertising. Michael i have done a lot of checks basically talking to large agencies that focus specifically on amazon. I think something that a lot of folks on the street dont necessarily understand or appreciate is that it is highly correlated to them with the business. Their ad business for the most part looks a lot more like alibaba, where you have a company, say, like procter gamble, selling products on the amazon site, also spending money on advertisements. This is a complete winwin for amazon. You get the consumer data, and it is a win for the brand manager at gamble. We are bullish. We think there are some good things going on. There are some interesting updates as you are mentioning them, conceivably on the deal front, with regard to amazon prime video. They had talked to tbs about exceeding 40 million devices at the end of the year. There was also some chatter that they were talking about going in and trying to bite just trying to sell other apps across devices. Taylor where does that leave other competitors in the space. I am thinking his new plus and andhinking disney plus netflix, potential oscar nomination. Michael i dont know if it is necessarily a bad thing for disney plus. For what it is worth, prime video, in my opinion i think of the amazon business as two primary things. Youve got aws, then you have retail and all the things that drive the prime retail around. What amazon could conceivably be thinking about doing, trying to go ahead, giving away the fire hardware for free, then perhaps a subsidized prime offering. To the extent that they can build a more robust video ecosystem, on the advertising side, that would allow them to subsidize that. Taylor Michael Levine of Pivotal Research, thank you. Coming up, we look at the largest chipmakers as the u. S. And china reach a trade deal. This is bloomberg. Taylor this is Bloomberg Technology global link where we join bloomberg daybreak australia. Lets take a look at the top global tech stories of the day. Shery i japanese billionaire seeks a special woman to fly with him to the moon. The first paying passenger on the 2023 maiden tourist voyage is looking for applicants through a documentary he commissioned called full moon lovers. He has a net worth of 3. 6 billion. Jeff bezos, the indian event in new delhi this week, but he is likely to face protests by more than half a million locals who are against amazons practices. This comes as they open an antitrust probe into amazon and walmart. More than 560 million indian Internet Users will soon have unprecedented control over their footprint. The top banks are rolling out a system that gives consumers access to their data and a choice of what to share and with whom. It aims to protect data and the credit market. Those are the top credit market. Those are the top global tech stories were watching. Taylor taiwan spearheading an effort in washington. They are stepping up u. S. Lobbying to ease the fallout for ongoing trade tensions. Ian king joins us. Is this a sign that maybe they are worried about their relationship given that they are now hiring a top lobbyist. Ian what we have seen over the last year or so amid the trade war, everything thought to be normal, the way the supply chain worked is now off the table and open to renewed scrutiny in washington. It is hard to overestimate the significance or how crucial tsmc is for the supply chain. They get cited as the biggest supplier but they are also huawei, qualcomm, nvidias biggest supplier. That is not just because they are the cheapest game in town. They have some of the best factories in the world. Taylor if there biggest their biggest suppliers are both apple and huawei, if one wanted to choke off huawei, to do so with Taiwan Semiconductors . Ian this is the biggest question i think. If you are the u. S. Government and determined that huawei needs to be shut down, a a lot of the chips that huawei gets are made in those factories in taiwan. If you wanted to really shut down huawei as an entity, a real chokepoint. A real practice that has Chinese Business links and interests to step up lobbying in 2020 . Ian we saw in our story, people are spending more. Huawei are spending more. At the very least, you have to have more people on the ground, speaking to more people in the corridors of power in washington. Not only are we seeing more action being taken, but an increase in noise around who is thinking what and who will take action. Taylor what do we know about Peter Cleveland and what he may or may not have done formerly at intel that could give us insight into some of the next steps . Ian intel is obviously handinhand with the u. S. Government in terms of companies that are important. It has been lobbying that point for years. He is going to know the right people, the right processes. That is definitely something they could use. Is the recovery or bottoming out, despite the political challenges being ongoing . Ian we saw preliminary numbers out of korea, electronics talking about how prices are getting better. This is something a lot of people look at, the memory chip price trends as an open indicator of where demand is. I think 5g phones will require more memory, data, storage and we will have to see some demand on the backend. Companies like google will Start Building out infrastructure again. All of these are being taken as early indicators that we will see a better 2020. Taylor much more ahead, so stick with us. This is bloomberg. Taylor optimism swelling around apple as da davidson chairman has raised the price target. He cited the potential of 5g as his reason. Apple is already enjoying a rally thanks to strong iphone sales in china. Sonos recently went to war with google, suing the tech giant for infringing on patents. Google says its technology was developed independently. With more on this story and the overall trend of upstarts fighting against the pull of industry giants, attorney ira blumberg, and brad stone. Brad, let me get your take on sonos and google. What does this take about sonos and where we are in the fight with amazon . Brad it is sort of a movie we have seen before in tech. I feel like sonos is having its tivo moment. In 2014, there was an earthquake. Amazon introduced alexa. Suddenly, sonos was a step behind. I am not qualified to talk about the merits of the lawsuit. Clearly, sonos is seeing a market that is racing ahead. Tivo has found a path forward in dvrs by licensing its tech. Taylor how does a company like sonos survive in this environment . Ira it is a tough one. Sonos has a fairly high price point and google and amazon can sell their products for a lot less money. My understanding is that the google and amazon products are not as high fidelity. They are interested on the Voice Recognition technology. They are in a price squeeze, having trouble being profitable even at that high pricing. They are trying to get a royalty stream that has allegedly integrated their technology. Taylor that brings us to a different company, suing apple watch. Does this case differ or is this similar, a big company stealing a small Companys Technology . Brad mossimo is a heart Tech Health Tech company. Apple said it wanted to work with mossimo in 2013. They had meetings. Then two very Senior Executives at mossimo went to work at apple. Now, mossimo is suing apple saying, you took our best people and took our technology. For a jury trial, it looks bad, but it gets down to the merits of the patent, which apple will probably try to invalidate. Taylor in your story, you have this word, if you will, called seedlings. Sort of ceding over market share . Brad a group of companies who are pioneers and find themselves ceding market share to the big platforms. This is a script we have seen before in tech. Big tech platforms have emerged and kind of become black holes or gravitational centers for technology. Sonos is still valued quite highly. Spotify. There are many others. It becomes increasingly more difficult. Taylor what does this show about how some of these smaller Tech Companies initially partner with the Big Companies . Fitbit, mossimo. Ira it is a quandary. For a Small Company to get traction, they have to interface with an be compatible with existing platforms. At the same time, if they open the kimono too far, they do expose some of their secret sauce, which makes it easier for these Large Companies to duplicate what the Small Companies have pioneered. If you are a Small Company focused on a single product, you are vulnerable to the to the integration of the hardware role. The mobile phone is an example of that. When it started out, you could talk on a mobile phone. Then they incorporated so many more functions. There was once a very healthy ipod and music player market. Nobody buys those anymore. You just plug in or wirelessly connect your earbuds to your phone. You have all this integration that has put aside standalone products. Taylor we were sort of joking here on Bloomberg Technology, you get some of these Small Companies and you ask, what is your good exit strategy . Is it that are to be a sonos and a sonos better to be and fight back against a seedling, or a fitbit, looking to get acquired, is that a better strategy . What do you see, what do you recommend . Ira if a company can get a good offer in a buyout, that is probably the best path. If you are a single product company, it is almost inevitable that some Larger Company will integrate your functionality into a larger product. Your options are diversify. Just as apple did with smartphones. If smartphones had stayed phones, they would be single devices. If you are a small startup, one alternative is to diversify. The other alternative is to become attractive enough for an acquisition. The third is eventually phase out a Product Development and focus on Technology Development that you can license to the big Tech Companies. Taylor thank you to brad stone of Bloomberg Technology and ira blumberg of video labs. Plantbased meet products on the Meat Products on the market last year. The cofounder spoke to tom on the sidelines of the Greater China conference in shanghai about how competition for this market is shaking out. They want more plant protein, intake for the chinese consumers. Also, unfortunately, last year, it doubled the effect of the plantbased food sector. Like our competitors in the u. S. Like beyondmeat and impossible foods, they have done very successful marketing and Product Development. People are expecting if there is a company or a market for china. Tom do you have an estimate for the value of the market in china over the next five, 10 years . Is there a dollar number you are putting to your investors . Vince it is hard to tell right now. What we have is a very solid prediction. In china, plantbased milk or drinks is about 15 of the dairy market. If plantbased meet could be up if plantbased meat could be up to 15 of the meat market in china. Tom you were talking about beyond meat. They are knocking at the door of the Chinese Market but they do face some regulatory hurdles. How can you be in a position to fend off that competition . Vince i dont see that as competition right now because we are small. I would be excited if they came to Mainland China because that would open the market and agitate people. The main goal is the same, to get people into more plantbased proteins, plantbased foods other than animalbased foods. We have the same vision and same results that we want to achieve. It will be better. As soon as possible. Tom you welcome the entrance . Vince of course. We are open to possible investors from the u. S. And of course Mainland China. More and more local investors. Investors from the u. S. Or europe are more familiar. They also share the vision of why alternative protein is an important factor. Tom we are looking at one million to 2 million usd . That you will be raising in the next month . Is it too early to be talking about ipo plans . Vince it is too early, yes. Taylor that was zhenmeat cofounder vince lu speaking with tom mackenzie. We will hear about getting closer to Silicon Valley leaders. Tesla shares today topic 500 topping 500 for the first time after oppenheimer raised its price target. Chinas government signaled it would not continue to cut ev subsidies at the same rate as last year. This is bloomberg. Taylor facebook former general counsel will oversee tmobiles acquisition of sprint if the telecom deal closes. A federal judge approved the justice departments appointment as a monitoring trustee. He faces a federal antitrust lawsuit. He has done several Corporate Counsel positions, most recently for facebook. Attorney general william barr has requested apple to provide access to iphones used by the gunmen in the Pensacola Naval base shooting. He says it was an act of terrorism. It is an escalation of an ongoing fight between government and big tech, pitting privacy against national security. Apple has given information for the icloud account but has refused to open the phones. A Top Executive says iphone security and encryption says it cannot access on device data even if it wanted to. Secretary of state mike pompeo is planning to attend a dinner in Silicon Valley, including larry ellison. This comes days after new sanctions on iran were announced. I am joined by bloombergs sarah frier. What do we know about this meeting . Sarah pompeo is trying to garner support for the Trump Administration among tech leaders. There are a lot of other issues that tech leaders care about right now like immigration, the trade war. All of these issues are bubbling up to become very real. It is not just larry ellison. Mark andreeson, sarah friar, not me, but the ceo of nextdoor. Gearing up to be an interesting private event. Taylor i like that you brought up the tension with iran. Notable are a lot of these tech experts, would pompeo be meeting with cybersecurity tech firms . Sarah i think he would like to do that. It is interesting timing right now given that there is so much going on in d. C. , for him to be here. He is speaking at the Commonwealth Club tonight as well. I think, for these executives, who knows how long this administration it could be another four years. They need to establish these relationships, know where they can come in on policy changes, keep uptodate on what is happening. Taylor when you talk about relationships, it seems that for many of these big Tech Companies, relationship has never been lower. You think of all the antitrust, data privacy concerns coming from the Trump Administration that has fallen on big tech. Sarah it really does seem to be a bipartisan issue to want to scrutinize big Tech Companies further. We have seen a lot of employee uproar in the past when their leaders meet with trump for members of his administration. We saw a lot of uproar when tim cook went on that factory tour with trump. When Mark Zuckerberg had dinner with him. Taylor what else are we hearing you mentioned marc andr that is it for this edition of Bloomberg Technology the sure to follow our global breaking news network at quick takes on twitter. This is bloomberg. Manus this is bloomberg daybreak middle east. Yousef optimism is back as the u. S. Says china is not a you on a you want manipulator and clears another hurdle toward the trade deal signing. Manus chinese exports smashed expectations last month. Surplus. Trade no sign ofre is overheating in the u. S. Economy. Some want to wait for inflation to rise be it to rise. The company continue to be the most r