Transcripts For BLOOMBERG Bloomberg Technology 20240712

Today, Senate Majority leader Mitch Mcconnell said he will take any nominee to the senate floor for a vote. First, i will talk about the markets moves of the day. Abigail doolittle is with us from new york. Abigail a volatile one. You cant go a day without massive swings in the u. S. Sharply lower. The nasdaq at the lows, down 2. 4 . The s p 500, down 3 . At the end of the day, the nasdaq 100, what a turnaround. Led by the mecca cap faang index. The tech index for the s p 500 up about the same amount. In the morning, it did seem like there were some buyers looking. Apple, up 3 . You saw that stock leading another mega cap higher. Confidence as the day went on. Bonds did not rally all that much. The yen was flat. It was not really risk off this morning as a result. Very interesting, one reason to think that they be the buying think that maybe the buying will continue. Ign, all thesecus stocks started out the day lower. Big gains for those stocks. On thers wanting in stocks up huge amounts on the year, hope there is not more selling pressure ahead. About tiktok. Alk obviously, now you have President Trump suggesting he could renege on his approval of the deal. The Chinese Government saying they are not necessarily going to approve the deal. What were you watching . Abigail uncertainty. More volatility. Oracle has been doing the opposite of the broader markets. In the month of september, very bearish for technology. Since it wasut 10 announced that it was going to go after tiktok. Even prior to the announcement, there was a sense of optimism around oracle. Just the idea that they are trying to get into something new. Larry ellison, the founder, a supporter of President Trump. There may have been a sense that they could do well. Now, all of this uncertainty, unclear who the owner would be of the global entity. President trump saying that if it is a Chinese Company, it is not going to happen. But with this deadline pushed out to sunday or next monday, it is a case of kick the can down the road. In the meantime, oracle shareholders are benefiting. Perhaps more gains ahead. Emily all right. We will dig into what is happening a bit more. Abigail doolittle, thank you so much. Banjo to bring in shelley , who has been pounding the payment the past couple of weeks and over the weekend. A deal that the president approved, now all of that has been cast into doubt. China suggesting that they will not approve the deal. Where do we stand . Shelly there is definitely a lot of political posturing left on this deal. President trump came out over the weekend and said he gave his blessing. When he did that, he basically repeated a lot of things that were not true according to the negotiations, that this kind of to beould allow tiktok majority owned by american investors, that u. S. Investors would control the algorithms and the tech. According to deal terms announced by the companies, that was not true. Bytedance retains 80 ownership with a 20 stake going over to tiktok. Newsd trump goes on fox and says this is not going to happen unless there is majority control by u. S. Investors. I am sure there is a lot of political jockeying going on. A political deal on paper for this to all go through. A third option as abigail alluded to, continuing on with these extensions, then you get to the president ial election. What goes through the deal structure with oracle and stake . Sharing a 20 how does that actually work . On this is aath little bit tricky. The way they are suggesting it will work, a new entity called tiktok global. Bytedance would have 80 ownership. What they would do is raise a brandnew round of fundraising that would allow oracle and walmart up to a 20 stake. Oracle came out and said they are shooting for a 12 5 stake with walmart as the remainder. Other existing investors like sequoia and General Atlantic could also participate. That is because american investors own shares in the company, that would transfer over into the new company. If you do a little bit of fuzzy math, they would become american controlled. That is not really how companies are run. If you are minority stakeholder in the parent company, that does not give you any power or say over the decisions made at that company. Emily meantime, this is having gamingascading companies that work with tencent in the United States. If we see extension after extension for tiktok, what does that mean for concerns the president has voiced about everyone else . Shelly we chat, they are not really trying to create a political solution. Over the weekend, what stopped the ban was a preliminary injunction against the judge injunction by a judge saying this goes against the rights to free speech in the United States. You have lawmakers who want to get a deal with tiktok. With we chat, you dont see the same thing. Support in theny u. S. For any lawmaker trying to salvage that path. The broader outlook could be a lot more dire. Emily talk to us about what is next. Of things, he a lot of uncertainty. As far as the mechanics of the deal, moving through various approval processes at the white house, where do we stand . This will be multiple tracks at the same time. Donald trump needs to find a way to get what he wants, which is the talking point to be able to say that it is american controlled. Largely, the administration has been rallying against this deal. President trump came out himself and said, i put the blessing on this deal. I think a lot coming from trump publicly is a a lot of posturing. At least for now, the administration is behind that. In china on the other hand, it is a similar case. Originally, state media came out kind of supporting the deal somewhat reluctantly. Foreign ministers say we are not really going to talk about this. We dont think it is fair for the u. S. To go after our companies. More daysere will be of political posturing. Theres a lot more nittygritty details to work out, especially among so many players and so many companies. Tiktok, Chinese Government. The terms of the deal. We dont know how much money is going to be raised and who is going to pay for what and how it an ipo ino lift in the next year. Emily meantime there are reports that the founder of instagram is being courted for the tiktok ceo job. The interim ceo has been posting videos on tiktok to the tiktok audience. What is the latest on leadership at the company at the company . Are these reports true . Shelly we have reported that they did reach out to kevin. He has ties to the company. He was on walmarts board for a number of years and he was on facebook at a time when they were leading negotiations around. Ly, the precursor to tiktok. You have to not only deal with all this political posturing and geopolitical tensions, you will have to figure out how to answer to a lot of different kinds of shareholders with competing interests. It is a tall task, i am sure one that will be handled carefully. The interim ceo, vanessa sheouts vanessa pappas, was already passover for the job when they hired the disney executive. It will be interesting to see if she is considered again for this job now that she has heralded the company throughout all of this. Bloomberg up bs Shelly Shelly bloombergs banjo, thank you so much. We will have you back here tomorrow. Public report indicates that quibi is considering options including a possible sale. The company has struggled to sign up subscribers since launch. Sayser Jeffrey Katzenberg it is because of covid19. The company is looking to go public through a merger with an acquisition company. Coming up, microsoft looking to boost its Xbox Gaming Division with a new 7. 5 billion dollars acquisition. Details coming next. This is bloomberg. Making itsosoft is biggest video gaming purchase acquire zenset to ax media,a zenim owner of bethesda, for 7. 5 billion dollars in cash. As criticalontent to our platform. We have game pass growing really fast. We have got consoles. We are going into preorder. Cloud lastnched next week so people can play our games on their mobile phones. Content is foundational to what we do. With this move, we doubled the number of content creators inside xbox. Emily once inside xbox, ultimately will bethesda start making games for xbox and pcs playstation . Phil the collection of bethesda studios will be coming to xbox and xbox game pass. That is a huge commitment from us. In terms of other platforms, i think will make a decision on a casebycase basis. This is a move to show the strong commitment to the Xbox Community that great games are coming. Emily gaming traffic has soared , you now have 15 million subscribers on game pass. Some gamers have been disappointed in some of the gaming offerings. What do the quarters ahead look like . Phil we see gaming as a strong growth category. 3 billion people play video games on the planet. Half the connected world. It is nearly a 200 billion topline business. Both of those numbers growing by double digits. Gaming is just a secular trend in entertainment, people moving from passive to active entertainment. You see kids everywhere playing video games. It is a really strong place for microsoft to make an investment. With the transformations we are seeing in the business. Emily as you say, content is king. So i have to ask you about the tiktok deal. How big a deal is it that microsoft lost the deal . Phil we were pretty public about how that played out. Onont have anything to say how tiktok is working now. When i look at our growth aspirations in the consumer space as microsoft, i think our investments in gaming and reaching communities everywhere will be critical to our longterm success with consumers. Emily the Trump Administration is now pushing u. S. Gaming companies on their ties to tencent. That means fortnite and league of legends, hugely popular on xbox. What is microsofts position in this geopolitical tugofwar . Phil we have taken a longterm approach to gaming. We think people should be able to play the games they want with the community they want to play with on the device they want. That has been central to our strategy. We work with Global Partners to do that and we hope to continue to do that. It is a cornerstone of our strength of reaching over 3 billion gamers on the planet. Emily meantime, there is a Battle Royale between fortnite maker epic games, apple, and google. Xbox has its own situation with apples app store. Do you think apple and google are monopolies like epic says . Phil we think gamers should have access to Services Like game pass cloud streaming. We think that should be available to everyone. We are committed to making that happen. We will continue to work with the large mobile operators. We will work with apple, google, samsung. I think gamers should have choice with the devices they have on the content they get to play. Emily microsoft up bs phil spencer microsofts phil spencer, head of xbox. Kolas chair stepping down amid a probe from the sec. And, a potential game changer . Will this event follow through on musks big plans . All that coming up on bloomberg technology. This is bloomberg. Nikola founder and chair Trevor Milton stepping down today after allegations of fraud and a report that the company is being probed by the sec. Stock down 20 . For more, ed ludlow. What do we know on watch river milton has resigned . Why Trevor Milton has resigned . Ed they want the focus to be on nikola. What has been the case since the short seller report came out, since additional reports came out from agencies investigating those allegations of deception and lies about the technology is that all of the attention has been on trevor. He acts in a way that is unusual at best for a fiduciary at a public company. In the days following that report, trevor took to twitter, instagram, doing live broadcast sand details about his reaction to that short seller report. He stated that he planned to give a complete point by point rebuttal. As time has gone on, investors and wall street analysts have basically said that he needed to be reined in. The companys chief executive officer and ceo have been on ,his Charm Offensive to her peering at different conferences, trying to explain the position. They answered questions about the allegations raised in the report, they said right now we are all focusing on our core technologies. They said, now is the time for execution. Trevor is stepping away to shift the focus back on to what it is that nikola is trying to do. Committed toeems maintaining the big steak that. Hey recently took in nikola. But what happens now . A board member but was one of those key architects of that deal, takes over as chairman of the board. When you read across what wall street analysts have to say, it is that analysts must focus on execution. On paper, nikola has a strong business plan. It has reputable partners in g. M. It plans to begin building the semi truck next year with an experienced and respected truck brand. There are few companies in the world. Then robert bosch when it comes to developing technologies. A lot of the progress that they will make in Regulatory Filings are contingent on them securing further partnerships with other third parties. The question hanging over this, the credibility. Has there credibility been damaged and how long will it take to recover so that they can make progress in the things they want to do . Emily i want to move on to tesla battery day tomorrow. Elon musk tweeting a few minutes ago, perhaps trying to manage expectations, saying, Important Note about tesla battery, this in this affects longterm production. What we announce will not reach serious highvolume production until 2022. He goes on in more detail about how they still will see significant shortages in 2022. What are you expecting . Ed there is lots of excitement about improvement in Battery Technology and performance. It all goes back to the central aim, affordability. They have never been able to theyce the 35,000 ev have promised. The battery pack makes up around 25 to 40 of the manufacturing cost. How can they bring that cost down and make evs accessible to a bigger market . Emily coming up, we will be talking about the passing of Justice Ruth Bader ginsburg. So youre a small business, or a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. Emily this is bloomberg technology. Washington and the world still reeling after the death of Supreme Court Justice Ruth Bader ginsburg. Ginsburg, who became a feminist icon in her later years, passed away friday at the age of 87. President trump said he expects to announce his pick for this report by weeks end, before Justice Ginsburg is even buried. Dick durbin is among the democrats urging republicans to wait until after the election to hold a vote on the next Supreme Court nominee. To discuss, we are joined by the Massachusetts Attorney general maura healy. Justice ginsburg had a dramatic impact on all of our lives, especially the lives of women. To her your reaction passing and what it means for the Supreme Court russian mark for the Supreme Court . Ms. Healy it is a huge loss, it is a huge loss for the court and for all who work in her field. I think about all that she accomplished as a lawyer. We talk a lot about her and she is known, rbg. She became this icon through her role on the Supreme Court. But, one thing i really admire in addition to her work on the Supreme Court was her skill as a lawyer, as a litigator. She herself is the subject of terrible discrimination when she was going to law school. She was subjected to clerkships because she was a woman or rejected at law firms because she was a woman. And systematically the entire body of gender discrimination cases that we rely on today is really remarkable. So, a remarkable life, a remarkable woman. A trail blazer and a huge loss for the country. Obviously, this has set up what is going to be another fierce partisan battle. What do you make of the moves the president is making an Senate Majority leader Mitch Mcconnell is making . The president saying he will have someone chosen by friday. It is the height of hypocrisy. Mitch mcconnell tells merrick mcconnells nomination for a year. Ms. Healey it is laughable to see the statements coming from Certain Senate republicans saying that they will follow what donald trump wants to do and allow him to nominate somebody and have a confirmation process because it is partisan for them. It is a real disturbance and dishonor to the integrity of the rule of law. Frankly, our system of government where to matter your political party, matter how charged the times may be, there are certain things and it is absolutely the case that the next president of the United States should have the opportunity to nominate the next justice of the Supreme Court. And the position that donald trump is taking is not surprising, but certainly disappointing as are some in the senate. Im heartened to see others come forward with the courage principal and conviction and say they are not going to vote and that is really important. Emily should the president have a justice confirmed before he leaves office . How dramatically with that rishi american courts reshape american courts . What impact would that have on all of the lives of american citizens . Ms. Healey we have major cases coming up right now that were to be heard by the next justice, such as the constitutionality of the american character. Access toericas as health care that is so important. That court will decide whether or not the aca stance. That is one of the number of cases that is so important. It is so appropriate an important that the next president , whoever is elected on november 3, then be the person responsible for nominating the next justice. It represents the will of the people. This is the way the system is supposed to work. I think what Mitch Mcconnell and donald trump are trying to do an advocate for is really shameful. Says hes president planning to name a replacement as early as friday. He also says there are as many as five women under consideration. Judge Amy Coney Barrett seems to be a front runner. Are any of these potential viewdates in your acceptable replacements . Ms. Healey i think what people need to keep their focus on i call upon republicans all over the country who speak to basic principles. It is about the process and its about the integrity of the process. Again, you look at the situation of merrick garland, how wrong that was. To have Mitch Mcconnell then move to quickly push through a nominee in a much shorter timeframe is really terrible. Goodwill toople of continue to follow the acts of the leadership of Lisa Murkowski or Susan Collins and say no, this is not right. The next president should nominate the next justice. Im not going to get into an analysis of whoever trump has suggested were put forth. I think the important thing is the process because regardless of what party is in power, regardless of what time we are living in and through in this country, we have to make sure that we stay faithful to certain principles and the integrity of this is more important than ever. Emily we Cover Technology on this program, which is now facing antitrust scrutiny, as you and i have discussed. It is an industry that affects all of us in so many ways. What changes for the Technology Industry or could change without Justice Ginsburgs voice on the court, and with a more conservative voice on the court . Ms. Healey i think it is an interesting question. I guess we will see. There will be a new court in a matter of time. That is a fact. The kind of cases they take up, the issues presented will have to see how that goes. Personally as an attorney, think perhaps more about the role of the Justice Department. Bill barr has failed on so many fronts as u. S. Attorney general and completely advocated abdicated responsibility. That also applies when it comes to the work of his antitrust division. Some good people working hard, but nevertheless have heather work completely controlled by agendaarr with an that is solely his own and the president s. Whats going to happen in the Justice Department, whos going to take over, in charge of the antitrust division. And what kind of agenda will they be allowed to set. I think it will be a very different agenda in a Bidenharris Administration than a Trump Administration. For the markets, i sure hope we see the Bidenharris Administration and the integrity of a Justice Department restored. Emily there are major tech issues on the horizon, one of them is oracle and tiktok, of course. The evolution of u. S. China relations is another. What are you hoping to be on the bidenharris agenda should joe biden actually went this election win this election in november . Ms. Healey i think to begin with, it is policymaker not allison making not by tweets. Its policymaking and positions that are taken based on conversations with stakeholders and experts, and not on the latest comments by sean hannity. I think for many businesses, we have lived through a time with tremendous uncertainty where people are just waiting to see what it is that donald trump be heldt and having to accountable to that. Emily it looks like we have lost tehere she is. We lost you for a moment. Please finish your thought. Ms. Healey i was going to say, businesses and deserve clarity, steadiness and smart rulemaking enough policy by tweets. Day to day or hour to hour. That is what we have seen with donald trump. General,ll, attorney thank you for taking the time to join us. Glad to hear your voice on this very important and evolving issue on the show today. Thank you. Coming up, tech ipos. We saw a rocket fueled week for tech ipos but can they maintain momentum . We will talk to one Venture Capitalist and heavy investments with snowflake and unity, next. This is bloomberg. Emily a huge debut for tech ipos last week. Four Silicon Valley Companies Going public including snowflake and unity. The companies raising a lot of cash but who are the real winners . The offerings netted billions for Venture Capital and firms like sequoia. Joining us now for more on the big week, brad, Altimeter Capital founder and ceo. You are an investor in snowflake as well as unity. What did this mean for you . They are significant moments in time in the lifecycle of two really iconic businesses with iconic founders. They are certainly overnight successes. Snowflake, seven years into that journey with them. Unity has been on the journey for over a decade. I thought there were moments to reflect on incredible Software Companies they have built. The truth is the best lies ahead for those companies. Emily we interviewed the ceos of all the companies, all the Tech Companies that went public last week, including the snowflake ceo. Huge story and that the shares at a huge pop, over 100 , which also means they left a lot of money on the table. Unity had a big pot, not as big as snowflake. Take a listen to what frank told me about the pricing and whether or not he thought it was a pricing issue. We could have sold the entire offering at the number we close that. There is a such a thing as demand curve. Theres always investors who are willing to buy some number of shares at higher prices. So, he said he didnt think they could have sold the offering, the entire offering at the price they close that, though if they could have, that would not have been welcome news. Is it at all upsetting they could have made so much more . Brad i really think you have to provide context to what happened. We invest in both Venture Capital, but also Public Market investors. They have to think about the price at which they can earn a future return. I also have to put on a conference with bill gurley. You really have the two sides of the same coin on this debate. What you heard from frank is exactly right. You cannot look at the last trade by the last Retail Investor and say that is the price at which the entire multibilliondollar offering could have been sold that. I think from our perspective, this is an important milestone for the company will ultimately get the valuation it deserves. Whether it gets ahead of itself is not that relevant to us. We were thrilled that the company was able to go public at 120 a share which is a dramatic markup from just the price we did on the private round in january of this year. If you will make the case to the Public Markets are not good at valuing companies, he would have to make the case those private rounds that value the company at 12 billion of january at this year were also mispriced. Emily 100 is a lot. It is quite an uplift. Is there any lesson for the companies coming out of the gate later this year . Pelletier, airbnb. Brad you see several of those companies will be coming out using direct lists and other mechanisms to come public. The good news is there is innovation in Silicon Valley. This is the right conversation to have. Bill gurley really instigated us to have the conversation but we cannot paint with a single brush. Companies, the ipo will be the way to go. Unity is a different way to achieve price discovery. By theng model that was underwriters they participated in. It was a direct list and some of them have been quite successful. Others have had more of a mediocre outcome. We know there is this third door that bill talks about as a way to get to the Public Markets. Emily i know you file for a spac of your own, you cannot talk about that specifically. But talk about it in general. Is it a good friend . These companies are not going through the traditional vetting process, which i know gives some pause. Brad like every other financial innovation, there will be good ones and bad ones. You are right, i cannot specifically talk about it except to say living in the heart of Silicon Valley, i started my career as a securities lawyer. I will tell you that innovation that helped founders, that helps Companies Get to the Public Market, tap into those dollars easier, faster, less distraction with ongoing partners, i think all those innovations are good. I think all of this conversation, whether it is a reckless or the pricing, it is healthy for the ecosystem. You are also an investor in bytedance, the Chinese Parent Company of tiktok. So curious what it has been like watching these twists and turns as an investor on the sideline. Not knowing whats going to happen with a really important asset. Brad i tell you, the last 180 days have been unsettling in many different ways, as you know. Just throw this one on top of a heap of them that 2020 has brought. In 2017. Ay we met them we invested in 2017. It is just extraordinary what hes been able to build in that time. When we invested, he had the dream of becoming a Global Internet business. We thought that was a stretch. No Chinese Company has built a Global Internet business. Years,a matter of three he built a fantastic global business. We are thrilled to be investors. We look at the business of bytedance, over 98 of the revenues have nothing to do with tiktok. Theres a revenue of bytedance in china. We think that will be a fantastic investment on its own. When you look at the deal that was put together, set aside the politics, set aside your own personal views on how it got put together, the outcome for the investors of bytedance and the outcomes for the other stakeholders seem to be pretty good outcomes. Working withe also the board list on something called the board challenge to improve representation of black directors across Corporate America. How do you intend to hold companies accountable, how are you holding yourself accountable in terms of the diversity . Brad thanks for bringing it up. This is perhaps last week was a very seminal week with snowflake and unity. I would say we launched this two or three weeks ago. The response has been incredible. Its a very simple goal. We want to accelerate the diversity of all underrepresented groups on corporate boards. Black, latino, women. It will in fact improve the performance of these companies and it will reprove the outcome for the communities. I have been thrilled at the response from zillow to merck to the new york stock exchange, all the way to accolade health. We have Companies Taking the pledge. If they dont have a black director, they have agreed to add one within the next 12 months. The way we will hold them accountable is we are going to continue to use our social feed, come on shows on this and to share the successes. This is about shifting from a Corporate America 1. 0 where we checkboxes, to a Corporate America to point of that uplifts and encourages people to realize the vast potential of tapping into these groups. Emily all right, good to hear about the important work you are doing. Thanks for sharing it with us. Thank you so much for stopping by. Still ahead, once deemed a front runner in autonomous cars, uber now reevaluating its selfdriving division. The saga as well as californias gig workers bill putting more pressure on the ceo. We will discuss next. This is bloomberg. Emily uber was once a serious contender in the race to build self driving cars with deep pockets and some of the best brains in robotics today, the effort is lacking far behind and has investors questioning the project. For more, i want to bring in lizette chapman. Where do goobers selfdriving efforts stand and what do investors want the company to do . Lizette hey. Efforts haveriving really lagged behind the competition since they brought out this subsidiary last year. It is not making a drain on the corporate Balance Sheet anymore because it is a standalone group but is this not address the existential question whether it should be in the business of making cars at all or whether it should partner much like lift has done. The situation now, they sold about 14 last year. They are going to run out of money for this division at the end of next year. We have investors now pressuring him to figure out what the funding plan is going to look like and more importantly, what the strategy is going to look like. Back a fewping paces, how is uber actually performing . Thatte what we know is they focus a lot on replacing the Core Technology so we wouldnt have to license it anymore, from Carnegie Mellon university. That is what they have been doing behind the scenes for the past year they have gone dark and quiet. We know that a lot of their partnerships are either stalled or kind of in purgatory. There arrangement with daimler is paused on passenger cars. Another deal they had with active is on hold. Dhara has privately atg co2 explore open sourcing of technology which would be a radical turnaround in the meeting got really contentious. Delete has dismissed it as being too complicated and opening a can of worms. We also have investors like bill gurley saying this is the route to go and they can make a lot more progress, much faster and maybe even become a leader in the selfdriving effort if they do that so they can better compete against the leaders which are googles waymo, gms cruze and amazon have all made great thanks. Waymo, they have logged hundreds of thousands of miles and more than two dozen cities and uber operates less than 10 carson just two. Emily ok. We will have to leave it there. Thank you for joining us. Bill gurleys ears are probably burning. That is it for this edition of bloomberg technology. Bloomberg daybreak australias next. Give you my world how can i, when you wont take it from me you can go your own way go your own way your wireless. Your rules. Only with xfinity mobile. More voluminous hair instantly. All it takes is just one session at hairclub. Introducing xtrands. Xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. Theyre personalized to match your own natural hair color and texture, so theyll blend right in for a natural, effortless look. Call in the next five minutes and when you buy 500 strands, you get 500 strands free. Call right now. upbeat music haidi good morning and welcome to daybreak australia. We are counting down to asias major market open. Shery good evening. Wall street pairs losses as the tech rebound tempers concern about stimulus prospects and reports of suspicious transactions at leading banks. Stocks had earlier been at near a market correction. Tiktokoracle