The coronavirus takes a toll with tech leading losses. Earlier, apple cut its revenue guidance for the march quarter with the outbreak continuing to impact the iphone maker supply and demand. The coronavirus is impactful, but not permanently impactful. In other words, it is a temporary blip. On the demand side longer term for apple, i dont see any issues so that gives me a lot of confidence we will see a nice rebound when this is over. The bad news is, apple made a big bet on china. 20 of revenue, a huge part of the supply chain. If the virus isnt contained, this will continue to be a problem. In longerterm, it china and the was a u. S. Are likely to be at loggerheads. I think the virus could be a problem longer market thing. There is no better ceo to handle the current challenges then tim cook and while it is currently concerning, having him at the helm is very reassuring. It is quite hard to shift production in a number of weeks. Emily we got more reaction from the Senior Research analyst at cowan who joined taylor riggs and paul allen to say why he thinks the supply disruption wont hurt demand. What you are seeing today and since apples big announcement yesterday was the fact that a lot of it, besides demand, it is really supply chain disruption, and it has taken a while for the supply chain to ramp up. It seems there is an opening in china, which is a positive but at the same time, the virus is still a threat and people are being cautious. It is an effect that will play out over the next month or so. We assume it will take, and of march, which is end of march quarter, to get 100 position rates and that is a double whammy from the fact there is some slowdown in demand, but it is a supply. Taylor weve gotten guidance from apple saying they would miss on the top line. Fold that into your estimates on the bottom line. Krish first and foremost, apple did not give quantifiable analysis. We look at the numbers and took a cut on the biggest impact will be on the iphone, because people do buy it as a cyclical product. That is one of the biggest reasons for a big cut. It does impact gross margin, but apple has said they are going to invest in the modem business, you which they bought from intel and of december. They will invest in tv opportunities, so eps was down to 25 , from 3. 03 to 2. 24, mainly because the optics will stay high because they will invest in future opportunity. Mainly because the optics will stay high because they will invest in future opportunity. Emily for more on apple and the broader impact of the coronavirus on global markets, we are joined by mark lehman, president of jmp securities. Does apple highlight how much more revenue guidance and uncertainty we could really start to see from a lot of these companies . They are clearly ahead of the game. The first Big Tech Company to mention coronaviruses impact in the Third Quarter and i dont expect the last. It is amazing how resilient the market was today. We got along preview at market close yesterday and speculations on chat boards how bad the market would be today and the nasdaq was up today. It shows the amount of liquidity in the market, the amount of demand in the market and frankly, there must be a lot of people shorting the stock because no one was expecting the stock market to be slightly up today. Taylor what is driving the resiliency in the tech market . You clearly have numbers that have been as good if not better than people expected. Rates really dipping this year. Look at the 10year from january 1 to today, it has been enormous in terms of the bond. Conversely, the yield has gone down. There is a lot of liquidity in the marketplace and these liquidity bubbles i dont want to use that word completely a lot of people have been waiting for a correction and waiting for a correction. We just havent seen that. We saw at the end of 2018, we havent seen a big correction. I expect more and more people have capitulated into this year, despite news from apple being negative for the market. Paul the supply change our these supply chains are so huge and interconnected, is all the bad news around the supply chain out of the way yet, because as the saying goes, there is never just one . Mark i think there will be more news ahead of us because everyone has been anticipating those numbers he mentioned earlier about the number of deaths and number of new cases go down precipitously at some point and that has not happened. The longer this goes on where we are highlighting how many new cases there are, the longer this virus goes down and the longer supply chain is inflicted. It is a seasonally slow period. We have the Chinese New Year at the same time, so it is a seasonally weaker period for tech. That supply chain takes a long time to ramp down and like a good engine, supply chain takes a while to ramp up so i would expect more announcements over time. Emily that was mark lehmann of jmp securities. Apple is considering giving rival apps more prominence after criticisms it provides an unfair advantage to its own product. Here is Bloombergs Mark Gurman with joe weisenthal. App, one ofefault the preinstalled apps is very key. These are the services you will use and like you said, they are hard to replace. You send me a text message with a web link, it will always take me to safari. There is no way, even if i have chrome installed, to change that given apples own safari edge over the competition. That is what apple is considering changing. Giving an option ios 14 to switch from safari to chrome in that example. Is this to get ahead of potential antitrust concerns over the use of its own platform . I think that is a big part of it. This is something the house, the u. S. Government, was asking questions to apple about. To had a story in october detailing this issue. Apple, seeing what is happening to Google Search and android in the eu. But it is also a bad user experience. Lets say im a Google Chrome user and im not able to use it to its full potential. Maybe ill switch to android. Apple wants to avoid that as well. How many apps are we talking about that could be affected, apple apps . Apple has 38 apps preinstalled on the phone, our count. The big guys are firefox, Google Chrome, outlook, gmail, yahoo mail, the list goes on. Even if they give the option, you got to figure the default apps are going to remain the defaults for 99 of users. Mark thats the best way to put it. 99 arent going to think theres anything different, but the 1 is really key. Apple, even though they have a billion and a half customers now, that small user base of people who are early adopters, diehards of the company, super loyal, they influence their friends and other people. On the security issue, is there any issue this would compromise from a security aspect that some people find attractive about the iphone . Mark in some cases, allowing some features to not default could cause security concerns, but in terms of the web browser and mail, those are not big concerns that will be influenced. Bloombergs mark gurman. Morgan stanley makes the biggest acquisition by a wall street firm since the financial crisis. We will talk with Ceo James Gorman about why the bank is buying e trade. If you like bloomberg news, you can listen on the bloomberg app, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. Emily Morgan Stanley is diving deeper into retail by buying discount brokerage e trade for 13 billion. According to james gorman, the acquisition is a response to customers wanting more access to Digital Banking. We spoke to gorman shortly after the announcement thursday. Weve had a strategy in place a long time to continue to diversify and build out our Balance Sheet wide businesses. We did mesa west, a small Asset Management deal ive always felt e trade was an incredible brand, an Incredible Company with great technology, clearly doing stuff on the digital side at a pace that was ahead of where we were so we had the constant debate of build versus buy. We felt we were in the position to make a bold move and went for it. I was e trade the right grexit why why was e trade the right business as opposed to a newer business . You said digital was a big deal, did you consider robin hood . James i like e trades business model. They got a lot of clients, the huge workplace business, one of the best Digital Online banking businesses and they sit on 600 billion of assets. At it to 3. 1 trillion, stock member sitting on 600 billion, 21 billion in combined wealth revenues based on margins of 30 . It is not comparable. Robin hood is a completely different kind of business, so i like real businesses, real clients, real profits, theyve got all of it. Real clients, but much different than Morgan Stanley had traditionally taken on. How does this change the fabric of Morgan Stanley . James less than you would think. I dont think it changes the fabric much at all. The stock clients are all Corporate Institution so that is not different at all. For many of us, having Advisory Relationships have online accounts whether it is banks or Financial Institutions providing advice. The channels in the last 20 years have come together. What youve got to do is build businesses that make your clients happy, be convenient for them, not to yourselves, and for our Financial Advisors, already our clients, including myself, our consistently are constantly working electronically with Financial Advisors with Morgan Stanley. The channels have converged. 13 billion is a pretty hefty price tag for e trade. What do you tell the people on wall street who might believe you are overpaying . James i think they are jealous. That doesnt bother me at all. We pay to 3 billion premium and made 8 billion in revenue, it is for the half months of revenue. Foreign half months of last years earnings to buy and a in Iconic Institution with an Iconic Institution with 600 billion in assets, three hundred billion in revenues that will improve all our financial models. This is a nobrainer from that perspective. This morning, you said this would create a fullscale digital bank, checking, savings. James they have it. E trade also has 4000 employees, you have more than 15,000 advisors in your Wealth Management unit. Do you need 20,000 people to run that part of the business five years from now . James we actually have a lot more. You are talking about the registered advisors, which we have about 15,000. All the supporting staff, Customer Service reps, ops managers, risk management, and technology and support around it, it is probably a 35,000 person business. There are obviously some jobs, but most of this business just fits neatly inside Morgan Stanley and will be run as e trade inside Morgan Stanley. As the bank goes digital, does that mean fewer employees to make it happen . James goodness no. This is an opportunity for clients to expand with us. They are doing Digital Banking with other institutions. Now they can do it all at Morgan Stanley. We think we have 7 trillion of assets between e trade and Morgan Stanley. We want to bring those funds here. You have the number one stock trading business in the world, as well. Jp morgan is trying to knock at your door when it comes to that business. How does the e trade acquisition and tear trading business . James that is the equity business, number one in the world. We were number five post crisis. Technology within our trading platform, i think e trade could be added and vice versa. We are excited about using some of their technology, not just in Wealth Management but across our Asset Management platforms as well as equities and fixedincome. Emily that was Morgan StanleyCeo James Gorman. The deal prompted a downgrade from wells fargo security Senior Analyst mike mayo. He spoke with Bloomberg Vonnie quinn and guy johnson. You cant be a bank analyst without being a parttime tech analyst and this acquisition of Morgan Stanley buying e trade is about Digital Brokerage and Digital Banking. I think it is a fair question, but 13 billion for a company that is the stock market sensitive . This interestrate sensitive at a time when you have peak Retail Investor engagement and high stock prices . We are not saying this is the bottom. The timing of this acquisition, a 10 pe company paying 15 times earnings for another company just for starters is not ideal. Guy ive heard a lot about the corporate stock prime business and the fact this is a fantastic business and undervalued at e trade. Does that argument not stack up . It goes in the whole idea of revenue synergies. If a Brokerage Firm can get customers through a variety of ways, digital delivery, or through the workplace and to the extent Morgan Stanley has a broader suite of products, if you are an e trade customer, you should say this is fantastic. I would love to be in e trade an e trade customers even more right now because you have so much more of Morgan Stanleys research and products and ways to really have that experience. Having said that, if you are a Morgan Stanley shareholder, that comes with a lot of extra complexity, and i think cost over time. We think the synergies expectation, just like with the other mergers ive seen over three decades might be too optimistic. Guy do you think it was a competitive process . Do you think others were involved . Mike we have no idea at this point, and i cant wait to find out. There were some changing control provisions put in place for management just in january. Certainly a lot of questions about the timing of those, but could other buyers coming here . Emily that was wells fargo security Senior Analyst mike mayo. Coming up, lithium batteries have long been touted as the solution to carbon emissions, but that means other environment and ethical problems. Details,. Next. This is bloomberg. This week, tesla got a new street high target from the most bullish analyst on the street, raising to 928 from 729, citing teslas solar and battery products. Meantime vulnerabilities in , hightech cars are under scrutiny after analysts said they were able to trick a tesla into speeding during a test. Researchers put a strip of electrical tape over a 30 mile per hour speed limit sign, causing it to mistakenly read 85 Miles Per Hour and accelerate. Tesla has not responded to the study. Electric car maker tesla has agreed to buy cheaper batteries that do not use cobalt for its model three production in china. The lithiumion batteries are a main alternative to cobalt and nickel products. Lithium batteries have long been touted as the solution to carbon emissions, the production of lithiumion batteries might mean more problems in itself. Bloombergs alix steel has more. Alix the 20th century was the age of the internal combustion engine. The 21st century will belong to the battery. By 2040, the majority of cars sold will be powered by batteries. They will emit less pollutants, but the batteries have their own challenge. Lithium is a water guzzler. If lithium prices stay low, it may not be worth the cost to mine. The riskier method of pumping saltwater under ground to extract it. Nickel is used in cathodes and boosts density to allow electric vehicles to travel faster and farther. It is not clear whether minors in indonesia can even keep a steady stream coming. Cobalt presents an ethics problem. It helps keep the battery cool during charging and discharging, but they are terrible conditions for miners in kongo, the top producer. Some workers reporters have found are as young as four years old. A cleaner car may not be made more cleanly. Emily for a look at how other automakers are trying to keep up with tesla, alex spoke with the alix spoke with the former tesla engineer and ceo of lucid, a potential competitor. She asked how long tesla can dominate the ev market. Tesla dominates because they are the leader. It is dominated by the german automakers. We need to compete with core competitors. Mercedes s class is a core competitor car. Coexist 20 of room to alongside tesla. Money. Ly issue has been automakers pouring money into this. Even the battery prices are coming down. Are you going to need more money to make all of this happen . Peter well, weve got great funding in place. We are in a healthy financial place for the start of production. We will need funds to accelerate the growth of the company because we have a window of opportunity for the next few years. We want to accelerate our growth. We will need more capital to do that and want to accelerate the growth of a sustainable mobility to the world and right now, that is what mankind needs, a Widespread Adoption of renewable, sustainable mobility through renewable sources. Alix can you put some numbers on how much more you think you will need to raise . Peter i dont want to be too specific here because it is early days, but the auto business is capitalintensive. We are talking nine figure sums. Alix you feel the market is open to that, because they seem to punish traditional oems when they have the fire people and cut their buybacks and reward tesla. What is the response . Peter the traditional oems are s are struggling because they have their process fees, their methodologies, and many of those are suited to this rapid transition to electric mobility. We are a startup with a startup mentality. Lucid is based in Silicon Valley, and we are very entrepreneurial. With our spending, and our whole business philosophy is run that way. Alix what is different about a lucid car or batteries or execution from, say, a tesla or other evs out there . Peter worldclass technology. We supply the batteries to all the cars so we have a race proven Battery Technology underpinning our car. Emily that was lucid ceo peter rawlinson. Still to come, the eu seeks to dictate terms of tech competition. You will hear from the eu competition commissioner. Bloomberg tech is livestreaming on twitter, find us technology. Be sure to follow our global news network. This is bloomberg. [ fastpaced drumming ] [ fastpaced drumming ] emily welcome back to the best of bloomberg technology. Im emily chang. The eu has unveiled a new strategy for deploying Artificial Intelligence in europe. They legislative plans have new rules on firms that want to deploy similar technologies in europe. Companies like facebook and google will not be exempt. The move is the latest attempt by the eu to leverage its vast developed market and compete with the u. S. And chinas hightech power. As the European Commission unveils its white paper on regulating social media and ai, commissioner Margrethe Vestager said she favors one eu digital tax for the companies. She spoke with bloombergs maria tadeo in brussels. Margrethe theres a difference between a shift in tone and a shift in behavior, and i think everyone appreciates that we can have another debate about the responsibility of giant platforms. But i think the important thing is to see real change on the ground and that, while we are still considering whether regulation is needed to make sure all the things we decided in the real world are represented when we are in our digital reality. Maria we know the eu has been pushing hard for tax reform on digital services. Is that something you think this year will be the year we finally see some move . Margrethe that is what we are pushing for, because we would want to tell all the many , many businesses who pay their taxes and the many people who work in businesses that pay their taxes that they are not faced with unfair competition from Digital Businesses who have been able to escape because corporate taxation doesnt understand digital value creation. We will do our best within the oecd framework to create a global consensus. Maria you are meeting a lot of executives, going back to Mark Zuckerberg but not just him. Do you get a sense now that they get a sense you are serious about this and they have to pay more tax in europe . Margrethe i think so, yes, and it is kind of tricky because if each member state makes their own system because they have to deal with one set of rules in one country and another set of rules in another country and maybe it is easier to say this is how it is done in europe. One stop, here you go, these are the taxes you have to pay. Emily that was European Commissioner Margrethe Vestager. Meantime, new scrutiny on an old u. S. Law that protects Companies Like google and facebook from lawsuits over content their users post. It is section 230 of the Communications Decency act passed in 1996. Back then the hope was the law would allow the internet to flourish. But if u. S. Attorney general william barr gets his way, the rules will change. He says giving broad immunity to platforms that purposefully blind themselves and law enforcers to illegal conduct on their services does not create incentives to make the online world safer for children. For more, we spoke to bloombergs ben brody who is has been covering the story. Are a lothot is there of complaints. We heard the attorney general layout a lot, child safety, the power of platforms. We heard a lot of other people talk about drug sales, gun sales, online misinformation. The list goes on and on. We have heard about hate speech. But the question of what we do about it, and that is up to congress, that is not something that has been settled on. We may be getting closer, but ultimately, congress is going to have to change the law if it is going to change and that means if that is going to change this year, passing something in an election year. I think we are not quite there yet, but what we are seeing is pressure on companies as part of the broader tech lash. Backlash. Emily how are google and facebook responding . Ben this is one of their bottomline issues they are always going to be going out there and talking about, how important it is in their lobbying. Interestingly, they did not come to this workshop. It is unclear whether they were invited and they dont necessarily talk about it publicly. It is often through trade groups. What those trade groups will tell you is that section 230 protects free speech online and makes platforms less likely to cut you off. It also allows the platforms to take down that really offensive stuff. 230 protects what you dont take down, but it also protects what you do take down and they say that create the Legal Environment that provides the proper incentive to use the attorney generals were there, to take down that most offensive content, but i think none of us really want to see online. To your point about social media companies, we had Mark Zuckerberg in europe recently calling for more regulation, but how genuine is the call being perceived . Ben i think there are a lot of people who say it does not go far enough, that they dont really believe that the platforms have the publics best interests at heart here. I think what is fascinating is seeing these companies approach what is essentially a fractured regulation around the world. Various regions of the world, looking at bringing on content rules. These companies saying we are our worldwide businesses, how do we harmonize these regulations . You see facebook coming out this week saying tell us what content is offensive and we will block it. But you have to tell us precisely. You have Tech Companies trying to get language like this provision into our trade agreement. To export 230, which is uniquely american, around the world. You see these companies trying to get uniformity on a variety of different levels, whatever that looks like. Emily how does this fit into the broader and ongoing scrutiny from the doj . The ftc . Looking into past acquisitions, which would obviously have a global impact, given how enormous and influential these companies are around the world. Ben absolutely. Attorney general barr told us something we didnt necessarily know before, which is the idea to do the 230 workshop grew out of their already looking into competition in the market space. They being the doj. In his mind, those things are closely linked. If you talk to people who study tech policy, they will tell you 230 and antitrust are vastly different issues and, in fact, taking down 230 could possibly entrench the biggest incumbents, at least attorney general barrs mind, these two issues are linked, part of the broader techlash and he wants to pursue them at the same time. I think those things are only ramping up and he, by holding this workshop, even if there isnt consensus, is providing a forum to go to congress and say look, here are the complaints. Here are the variety of things we think you could do about it. It is on your plate. Emily that was bloombergs ben brody. The Semiconductor Industry last year suffered its worst annual slump in almost two decades, hurt by a trade war between the u. S. , the largest chip producer, and china, the largest consumer. Intel ceo bob swan has been a leader, urging them to engage in constructive dialogue on the amid trade tensions. He spoke to bloombergs brad stone and they talked about intels Global Supply chain. Bob for a global company, we have huge r d and manufacturing presence in the u. S. , so we need markets outside the u. S. Creating value for our customers and making money, gives us more capacity to invest in the u. S. In r d. We have all had to adjust and adapt in a variety of ways, and i say that meaning we play a large role in china. It is a big consumption market both on the pc and server side. We have a reasonably Large Manufacturing base and a large chunk of employees in our Design Centers in china. So it is a very important market manys and our customers in ways. So we have had to adapt our supply chain to have flexibility to allow some of our oems to move their assembly so they dont have to deal with tariffs. Weve had to stop in cases as export laws change. Weve had to stop shipping to some customers. Our priorities and our focus about retaining market access, protecting our ip, and adjusting and adapting to the rules of the road. How serious is the risk that in response to the trade war, china could double down on the development of its own indigenous chipmaking capability . I know they are nowhere close right now, but over the long term, is that a threat to intel . Bob i look at it in a slightly different way, whether it is a hyper scale with incredible capabilities, whether Venture Capital going into semi, whether it is China Building their own capabilities. For us, it all leads back to the rate and pace of innovation. To continue to defy the odds and do things that nobody else can do, such that when they have to make these decisions, intel and the role we play in the world is near the top of their list. That presumes they are thinking rationally. And they may be, but another irrational aspect is International Security and national independence. Is it more realistic china develops a chip capability because of these global tensions . Bob in so many ways, we have to focus on things that we can control. But we also focus on things that we can control and influence. Along the way, i still come back to the same answer. Pace of innovation and deliver things that nobody else can do is the best path to continue the trajectory for the company. Bob brad speaking of things you can control, have you moved any production out of china . I know you have some memory chip production in china. Bob we have a very global footprint in the u. S. , predominantly, israel, ireland, that is our fabs. We have an assembly in malaysia and vietnam and china. So we have a very global footprint, so we have the flexibility to adjust and that and adapt to where we make things around the world. So far, we have diversity in our footprint. We call it a virtual factory, so we always have the ability always to move things around and optimize and manage risk. Emily that was intel ceo bob swan. You can be sure to catch the full episode of bloomberg studio 2. 0. Coming up, will the blockchain deliver . Developing a programming language. Later, one Sneaker Marketplace wants to change the way people shop. This is bloomberg. Emily blockchain in 2020. Will reality live up to the hype . This book to deliver on his promise. Digital asset is backed by giants like samsung. Here is my conversation with the ceo. Yuval we are looking to use the money to expand to reach into Different Industries. We are also looking to increase some of the developer tools we have been building in recent years, and to achieve some of their ambitions using the technology. Paul youve got some high profile partners. Can you tell us more about some of the things you are working on for them . Yuval as the industry progresses over the past few years, youve seen what is similar to the early days of cloud, blockchain is becoming more and more mature and you are starting to see players like vmware, microsoft, amazon enter the space and offer their services. We have both clients we help develop solutions, but we also have partners such as vmware, microsoft. What we do is Work Together with them to bring some of our expertise and some of their expertise to be able to deliver some of these projects to our clients. Emily you have always seen so much hype around blockchain. When do you think is it one to five years out when we will really see the promise of this technology that people like you and others have been touting . Yuval i think this year you are going to start seeing some projects in production. There is some announcement that recently happened by road rage broad ridge that are reshaping how you trade u. S. Treasury repo using blockchain and you are going to see that happening this year. You are going to start seeing other projects in Different Industries like the Health Care Space starting to move closer and closer into production. At the end of the day, this technology is pretty invasive and there was a lot of hype, but at the end of the day, to implement this kind of technology that is pretty invasive into some core systems will take some time but i do think this year, you will start seeing some of these projects in production. Emily facebook with libra make a lot of noise last year. Weve seen some of the biggest players drop out. Would you count facebook out of this discussion at this point . Yuval first of all, this entire industry should thank facebook for their effort, because i think those that were skeptic have gotten a wakeup call and that is a good thing because at the end of the day, this technology will happen and will shape the next generation of technology. From that perspective, i think the industry owes a lot of thanks to facebook. When it comes to Capital Markets and to money, regulators are extremely concerned and i think that what could have been done better is how the industry worked with regulators. This is something that we take to heart extremely with every project we do. We work with regulators to work within the current Regulatory Framework and if there are changes that need to happen, we work with them on that. In the case of facebook and libra, that caught the regulators surprised and i think that is what caused a lot of the backlash on facebook. Emily it is not just big tech giants like google and facebook feeling the heat of u. S. Regulators, but rising players like airbnb. The worlds biggest homesharing app has been citing rental regulations in cities across the country, seeking to clarify its legal status and protect thousands of listings. Airbnb has filed at least 11 lawsuits against American City and state governments since 2008. For more, we spoke to mark milian, our bloomberg tech editor. What is behind it is a company that is trying to, essentially, create a new industry that is in some gray areas of the law in many places, and so we have seen over the years, and in recent years, the company has filed at least 11 legal actions against major u. S. Cities. Boston, new york several times several places in california, and they are essentially cases, to, in some change the law or carveout exceptions for themselves. It is part of this very aggressive Silicon Valley lets change the way things work and in some cases is parallel to what uber did in the early days. 120 lawyers here. Is there any sign they are willing to work with governments here or is it all just hostile . Theyve made some concessions but it is a company that realizes they need to change the way things work in certain cities and carve out some of these exceptions in order for their longterm prospects to make sense. This is a company that, probably in the coming months will try to list its shares publicly, so they want to be able to show they have got a secure position in some of these big places like new york and boston and elsewhere where they have had challenges from officials about whether their service is even legal. There is a lot at stake for the company as well. Rules on shortterm rentals are set locally, but they can be cited as precedents for other locales. As a result, it is not just airbnb that is affected. Other companies that do the same thing are also keeping a close eye on this. Mark right, and homeaways has been the subject of some of these legal issues in the past, but, airbnb is the biggest in any markets, including the u. S. , and so they have had to take a leading position in taking cities and states to court in order to secure the market for everybody, but most of all for themselves. Emily that was bloombergs mark milian. Still ahead, how an online marketplace aims to make sneaker resale more accessible. Our conversation,. Conversation,. This is bloomberg. Emily want a pair of kanye west kicks without the pricey tag . Enter the exploding sneaker resale market, dominated by an Online Platform you can buy used where you can buy sneakers used and new. Taylor riggs spoke to the cofounder in our retail transformed segment. Goat is the Global Platform for style. So, we really want our whole mission is to make our buyers globally feel and look the greatest. So, when we launched goat in 2015, my cofounder, his first bought whenans were he was 10 years old from his dad, so 20 years later, he went on the largest marketplace of the time, ebay, to buy the shoes. He bought them, received them, and took them out of the box and he was so upset because they turned out to be fake. We were like, how come in this day and age, spending 300 on a pair of shoes and still have to worry if they are real or fake . Lets build a marketplace based on trust and safety. We pioneered what we call ship to verify. Whenever you buy something on goat, the seller doesnt ship to you directly. The seller ships it to one of our warehouses globally for us to authenticate. We use Machine LearningHuman Technology to authorize these products and quality inspected and send it to you, the buyer. That is why we have a business. Nike is the most counterfeited brand in the world. We are here to protect the consumer from that. You have mentioned shipping twice now, and you are passing the cost on to the customer. What was your Decision Making to pass that shipping cost onto the consumer and not eat it yourself . Eddy because it is such a big value proposition, because there are so many counterfeits in the industry. Last year alone we prevented 72 million of counterfeits on our system. There is an additional cost, but i think for the consumer, would you rather spend 500 on a pair of shoes and have it the fake or spend a couple extra dollars on shipping to make sure something is authentic . Thats what we have seen, where the customer really understands the value in our value proposition. Taylor there is a big trend in the Retail Market right now called direct to consumer. How are you handling the increased wave of direct to consumer . Eddy for us, because we are primarily in the secondary market our Sneaker Market is primarily secondary. We accept all forms of purchase. Whether the consumer buys it direct from a brand like adidas or nike, or the consumer buys it through a retailer like foot locker. The case is the fact that for house, nike and adidas have skus they released direct and these brands have a few hundred skus at any given time they are selling. On traditional websites, it is probably 1000 or 2000. On goat, we represent the past, present, and future for sneakers. We have over 75,000 skews you can buy from, which means yes, you can buy the current season styles direct, but if you want something from five seasons ago, Something Like my nostalgic cofounder, that is when you go to goat. Emily that was goat cofounder eddie lu. Elon musks spacex is paving the for life in space on the dragon spacecraft, up to four paying customers will be able to buy seat through a booking agency called space adventures. The Company Previously arranged flights on russias space craft. No word on how much theyll cost. That does it for this edition of the best of bloomberg technology. We will bring you the latest of tech throughout the week. You can turn in every day. 5 00 p. M. In new york. 2 00 p. M. In san francisco. Check us out on twitter, technology. Check out quick take on twitter. This is bloomberg. Brad he has spent almost his entire career as a finance chief, rising through the ranks at ge and then working at ebay for nine years alongside meg whitman. After overseeing the ebaypaypal split, he joined intel as cfo in 2016, and less than two years later, became interim ceo following the sudden resignation of his predecessor, brian krzanich. He was then chosen for the role permanently after the chipmaker conducted an extensive search. Today, it is his job to protect