Transcripts For BLOOMBERG Best Of Bloomberg Technology 20170430

Our exclusive with the ceo ahead. First to our lead. This week saw a showdown brewing in washington, cracking open the Net Neutrality debate. Fcc chairman ajit pai unveiled his game plan for rolling back Net Neutrality rules at a speech wednesday in the nations capital. Passed in 2015 by a democratic majority fcc, the Net Neutrality rules and to prohibit internet to prohibit Internet Service providers from favoring or discriminating against online applications, content, and services. Now democratic senator Edward Markey from massachusetts responded to the chairmans repeal, saying, it makes no sense. We cannot keep the promise of Net Neutrality openness and freedom without the rules to ensure it. Pai and the Trump Administration and the ceo should inspect a tsunami of resistance. The ceo said the rules as they stand have made a digital divide. We spoke to fcc digital chairman ajit pai from washington, d. C. Ajit this will be a political debate that will engage millions of people, but we are going to stay focused on the facts and the laws. The facts are americans by and large believe in an open internet but want to have an infrastructure investment. They want the next Generation Networks to be built out. I think what the fcc does not need heavyhanded regulation that saddles businesses with lots of rules that simply deincentivize from building those networks. That will be the course were charting henceforth. Caroline if these rules are changed, then they will invest . Im looking at the profits of at t, 14 billion. 8 billion if you are comcast, shares have risen since the original ruling. Of Net Neutrality. They dont seem to have really been hurt. Ajit if you look at the actual numbers with respect to investments, they are down 5. 6 for the top 12 broadband providers in this country. And that does not even include the smaller providers who are not included within that statistic. We have heard from cable, wireless, telephone and other providers who told us these title ii regulations, as they are called, are impeding them from executing on their business plans. They dont spend as much. They cant get as much financing. And as 22 isps told us, title ii hangs over our businesses like a black cloud. That is the kind of regulatory uncertainty and overreach that we want to remove. Every american deserves faster, better, cheaper internet, and i am committed to delivering it to them. Caroline so you take away some regulation and oversight. How can you ensure the right rural areas are indeed provided for . Ajit two things, title ii takes us in the opposite direction and reduce competition and increase what is called digital redlining. Companies have more of an incentive to look at rural areas or lowincome urban areas and say, you know what, youre not going to get enough of return on investment. Lets not deploy. Secondly, we want to make sure everybody has Internet Access they need and want, so i have a very proactive, proconsumer agenda to promote Internet Access, especially for those on the wrong side of the digital divide. Caroline so you are taking some replacement regulation advice, you are looking for suggestions. What do you think will come to the fore when you ask for this sort of advice . Ajit that is precisely the reason why we started this conversation. As i said in my speech today, this is the beginning of the discussion, not the end, so we want to hear from the american public, what is the best way to preserve those core values of a free and open internet, of more competition, and investment in infrastructure . I am confident we will be able to find a way that will appeal to consumers in the time to come. Caroline you are talking about consumers, very worth fighting for. You will hear their voices. Youve already heard the voices of perhaps smaller startups that might be affected by this, 800 startups and investors led by y, they are concerned about the rollback of Net Neutrality. You have also heard from the bigger players, the 40 proper internet companies, voicing their discontent. The letter you received today from the 800 tech startups, say, rather than dismantling regulations that would allow the Startup Ecosystem to thrive, we urge you to focus instead on policies that would promote a stronger internet for everyone. How can you allay those sorts of fears . Ajit a free and open internet is what delivered unparalleled comfort for the american consumer. 20 years ago, who would have for seen that google, amazon, netflix would become household names not just here in the United States but around the world . They thrived because of the light touch regulatory approach that started in the Clinton Administration and proceeded through the bush in and the first six years of the obama administration. That is precisely the kind of framework i believe will promote startup entrepreneurship everywhere in this country Going Forward. So i am committed to giving them a chance to succeed, but title ii does not allow them or others to do that. Caroline then why are they so worried . Ajit a lot of people have stirred up a lot of hypothetical harms and hysteria based on what they think will happen. If you look at the fccs 2015 decision, you will look in vain to find any example of systemic market failure where Internet Service providers were acting to block access to local content, so we wanted to take a factbased approach to figure out a way to preserve those core values, a free and open internet, allowing entrepreneurs to thrive, and invest in infrastructure and increased competition. Those are the kinds of things that will allow everyone in the internet economy to benefit. Caroline so thus far, the argument is more competition will basically promote the likes of at t and comcast to play by the rules and make it a fair and open internet for the content providers. Is there anyway you think this could be or should be measured . Are you going to look for any sort of oversight . I know that you dont want it to be heavyhanded, as you say. Ajit that is one of the reasons why we will ask for public input on what the Regulatory Framework should be. We know that title ii is not the right answer, but as we will see, and i will be publicizing the entire text of my proposal tomorrow, we tee up a number of different ideas for how to do it. We will ask the public, is there anything else we should be thinking about Going Forward . I think there is a way to do it, and we will try to find the best way in the time to come. Caroline therefore when you go out and start discussing, trying to bring some republicans as well as democrats into your line of thinking, what do you think will be the best way of getting certain democrats, who are still against this, on board or convinced . What is your key line of clarity, do you think . At the moment, you want to stick with the facts. Ajit look, we obviously are going to be doing more of a factbased approach than we did previously. The bottom line is this, the arguments i am making today are precisely the arguments made by president clinton in the 1990s. The arguments that were made by clintons fcc chairman in the 1990s. The arguments that were made by Democratic Senators in the 1990s. This is not some radically political fringe argument i am trying to make. It is the light touch approach that served the United States well under democratic and republican administrations alike. So i want to take the political heat out of this argument to the max extent possible. I understand it will be difficult to do, but at the end of the day, americans are best served with a light touch framework that focuses on the facts, adheres to the longstanding legal principles, and respects the basic principles of economics. The more heavily you regulate something, the less likely you are going to get more of it. Caroline coming up, twitter shares soared wednesday after the social network said user growth picked up in the First Quarter. We will dig into whether this growth will boost twitters bottom line next. And a reminder that all episodes of Bloomberg Technology are now Live Streaming on twitter. Check us out. It is bloombergtechtv, weekdays 5 00 p. M. New york, 2 00 p. M. San francisco. This is bloomberg. Caroline twitter, it reported earnings this week. It finally seems to be addressing its biggest challenge attracting new users. The social network reported average monthly active users rose 6 in the First Quarter compared to the same period last year. This growth comes as twitter posted a year over year drop in quarterly revenue. We held a deep dive and were joined by the Forrester Research director Melissa Parrish in new york and editor at large cory johnson. Melissa to some degree, sure, it is a bit of a trump effect, but i would say it is more about seeing the name twitter in the press more than it is growth being directly attributed to the president. I think the name has been associated with Current Events more and more and more especially in this last quarter, so sure, we can attribute some of it to the political events taking place and the conversation around to that. Caroline cory, whether it is trump or not, does this lure advertisers to start spending more with twitter . Cory we know the answer to that. The answer is no. User growth, great. 4 sequentially yearoveryear. The user growth has been pathetic at twitter and has been for quite a long time. If you look back to the ipo, 27 growth over 3. 5 years. That is not a big growth business. You would think they could pull money out of users. 2. 8 growth is better than it has been. A lot better than its been. It still stinks. You know, and is still on a small base compared to facebook, compared even to instagram, we saw pressure from that today. So those user numbers are weak. If you add to that their ability to monetize if users are not growing much, with all the data they said they would get about users and find out how to pull numbers out of that, what is the question . What is the revenue base and how fast is the revenue base growing . And the revenues were weak, down on a yearoveryear basis for the first time ever. But more importantly, the value of a twitter user is going down a lot. How much they can charge for each user is getting worse and worse. They cant blame it on international. International is still about 79 of the users. The advertisers are just not willing to pay to reach twitter users, and thats a real problem for this business. Caroline melissa, to corys point, there was a great quote in the bloomberg story saying, when facebook grows at four twitters a year, that tells you there is something really wrong here. Is there something really wrong, or are we just seeing a bit of changing in how they will be charging, and will revenue eventually pick up . Melissa i do think revenue will eventually pick up. But look, i am a marketing analyst rather than an analyst for investors or financial analyst. I think when i look at it, it is true. Revenues have been declining and that is a scary story to hear. They are doing things that will be more appealing, make them more appealing to advertisers in the future. They are doing some hygiene. They are getting rid of some ad products that they know dont work, they are focusing on cleaning up some measurements. These are small things , admittedly, but they are things that look like they are going in the right direction. Are substantial changes really needed . Yes, i think so, both in terms of the core product and the ad product. I think we need to see some real innovation rather than some of the incremental changes, but from my perspective, the moves that they are putting in place should make them a bit more palatable to advertisers in the future, yes. Caroline that was Forrester Research director melissa parish and editor at large cory johnson. Alphabet also out with earnings this week. They came on the heels of alphabets stock seeing record highs in trading. We dug into the report with the ceo of carl worth and someone from the department of research. Take a listen. Mike we were surprised the stock was not up more. The earnings beat by about 4 , the stock is up 4 , so investors are treating this as the same company it was before the earnings came out. In our minds this is a Higher Quality company, and investors are not showing that in terms of rising sentiment. We are still as confident in alphabet before the earnings came out. Confident. Caroline so mike is c. Harry, i want to get your point of view because i have been speaking to an executive and asking, look, what about the youtube controversy, the backlash from advertisers, the slowing down of wanting to link yourself with certain videos . They said this would be a modest effect in the mediumterm. In the longer term, we could see improvement as they change the business. Are there worries around this, harry . Harry in q1, it would not affect the business. The ad boycott only happen in the last month or so. It really started in u. K. In it , and it has spread to the u. S. If you look at youtube as an entity, most of its revenue is generated from the small to mid tale of advertisers, and it is the one stop shop for them. For the largest brand advertisers who really want to be in brandsafe places, youtube is a scary place to run, and it really was not built for those largescale brand advertisers. Youtube was sort of caught proverbially with its pants down where there is now a lot of press around great advertising and great advertisers running against hate speech and other problematic content. But what you are seeing is that google is now having to approach this problem and deal with it, and i think there is a little bit of chinks in the armor of youtube Going Forward trying to deal with us. This. Caroline chinks in the armor, mike. Mike, you are not worried about youtube at all . Mike we are not too concerned. I was waiting to come on here, and i was watching you earlier with the commentary that google only expects a modest impact. I think that is very telling. I think this was a major blow to potential sentiment, a blow to the pr for google. And here they are, and it is only going to have a modest impact. I think in our minds, they have done a good job of identifying the problems and working to correct it. Our sense is google is seeing everything from the inside, not seeing a major major impact yet, so i would typically go with that commentary in terms of the forward impact. Caroline harry, if we are moving away from youtube and other areas, we were concerned about the money plowed into socalled moonshots. Ruth porat, the cfo, came in and got a rein on it. Do you feel more at ease . Perhaps the have a handle on the spending . Harry i dont think it has made a major contribution to their revenue. You can see from the numbers that the core business is still advertising across search and video. You know, i think that they are going to be careful about spending their money in the right places. The key thing for them as they have to find that next growth area. Who knows whether these types of problems associated with content are going to have longterm effects on their video business. I think search is pretty safe, but their video business i think over the longterm, if it is not seen as a safe place for brands to run, it will have a material impact. You may not see it next quarter or even the quarter after, but i think over the next few years, you wont see 80 of video budgets into youtube digitally. And so these moonshots really are a way for them to diversify their revenues into different areas. Caroline still ahead, we stick with earnings and dig into another tech giant that has reported this past week. Amazons full scorecard next. Plus, tmobile out with another subscriber win. Ceo john legere joins us to break down the companys numbers for the year later this hour. This is bloomberg. Caroline now amazon may be diving into the Driverless Cars race. The tech giant has formed a team that is dedicated to developing selfdriving technologies, well beyond the realm of cars. This according to the wall street journal. Now at least 12 employees were assigned to the group a year ago to examine how driverless vehicles could help amazon deliver packages more quickly. Now this is not the first time we have heard amazon could make a play in the autonomous driving sector. Earlier this year, amazon was approved for a patent for a rudimentary Management System to help selfdriving vehicles on the best lanes for their driving needs. Speaking of amazon, the ecommerce giant came out with earnings this week. James mcgreevey of forrester and jitendra of Bloomberg Intelligence join us to break down the numbers. Jitendra the whole investment cycle amazon embarks on, they are saying that, hey, we can deliver the topline growth, so itll be ok if we increase spending to bolster our growth story. From a profit perspective, the north american margins are studied, but the International Sort of losses continue because they are extending aggressively here, and have a lot of opportunities to expand prime internationally, so the growth runway continues, but more importantly, they are showing that they can execute against these numbers. Caroline i want to dive into our bloomberg again. It is quite phenomenal to show even though we are at these lofty, heady heights for amazon, we have not one single sell on the stock across all analyst recommendations. Largely they are buys, a few holds overall. The stock trades higher in afterhours. Lets get james mcgreeveys point of view. Was it aws and prime that stood out for you . What about the margins from amazon . James certainly we are happy to see aws perform well. It was good to see the numbers come back up. But really for this company in the long run, we need to see it can fire on all of these cylinders, but the u. S. Business in particular. The margins are small, will continue to be small, but we are really confident it will continue to grow year after year after year. There is still so much headroom in the u. S. Retail business for amazon to claim that between a highgrowth product like aws and a solid domestic Retail Business that is growing and growing, i think that is what will fuel together the International Expansion they are working on. Caroline interesting, both of you have talked about International Expansion. Jitendra, i think its interesting the Earnings Press release lead with india. There is a clear sign of intent coming from amazon. Jitendra absolutely, and the people just look at their investments and their strategies, which are regionally different, the pricing strategies are also different. It is basically telling you they are expanding by localizing their strategy in which is working for them. Caroline mexico also a new area that they are launching prime. What about the content side of the business, james . With amazon prime comes the fire stick and fire tv. They are spending big as ever. It reeks in revenue but does not always deliver profitability. James right, a real way to think about the video focus and any content focus is how do we increase the number of engagements per day and minutes of engagement per day . You can think of amazon echo and alexa as an extension of that. If we get you to touch amazon in some way, eight, 10 times a day, that includes video are asking alexa what the weather is, all that eventually accrues to i am going to shift a larger percentage of my retail spend to amazon. Even though that is not generating topline dollars, it is submitting what is undoubtedly the industrys most powerful customer relationship. Caroline where next in terms of where amazon can possibly go . We are seeing record highs for many of these stocks. I am looking at amazon with with a 439 billion market cap. Its about to grow as it holds onto those trading numbers. Are you expecting just continued positivity coming from amazon . Jitendra as he mentioned, now that these touch points at amazon keeps adding with video, with the ai insistence, different products and services, it brings people back to prime. Once people are back to prime, they spend more, so this cycle has a long runway, because if you look at the markets, they are just starting to enter. There are International Markets where there is a lot of headroom for the retail segment. And of course the Cloud Business continues to beat expectations in terms of how big is this market, and that number keeps on going up. I think they have end markets big enough to sort of like support that growth longerterm. It is just a balancing act of how much should we invest and continuing to show these positive roi numbers through revenue growth. Caroline james, im going to ask this to our guest when we discuss alphabet, but how worried should alphabet be by the growing advertising side of that business that amazon is starting to show off, and are these really Key Competitors . We see them fighting it out in cloud as well. James absolutely. These are probably two of the most unlikely competitors that people for years tried to separate mentally, but they are in the same business. It is the business of attention. If you think specifically about advertising, amazon is in a position to give you much more contextual ad placement than google is, even though you are working against the search results. It is not nearly as powerful as product search results. When you add what amazon can do with observing you in your life with cameras that as of this week it has added to some of the alexaecho line, it will be in a position to know so much about you and make product recommendations that surpass the value of advertising coming at a time when major brands like p g are pulling back millions of dollars. If i am google or alphabet, im very nervous. Caroline that was James Mcquivey of Forrester Research and Jitendra Waral with bloomberg. This week, we learned espn will cut 100 staffers in an effort to save money. That is according to a person familiar with the matter. They say the leader in sports tv is coping with the rising cost and fewer subscribers. In a memo to staff, the espn president said the Disney Network is determining who to cut from the current payroll. Now coming up, our exclusive interview with dropbox ceo drew houston on the companys latest milestone as it charts a path towards ipo. And a reminder that all episodes of Bloomberg Technology are now Live Streaming on twitter. Check us out at bloombergtechtv, 5 00 p. M. New york, 2 00 p. M. San francisco. This is bloomberg. Hey youve gotta see this. Cmon. No. Alright, see you down there. Mmm, fine. Okay, what do we got . Okay, watch this. Do the thing we talked about. What do we say . Its going to be great. Watch. Remember what we were just saying . Go irish see that . Yes im gonna just go back to doing what i was doing. Find your awesome with the xfinity x1 voice remote. Family time is awesome show me the radio disney music awards. Just say it and see it with the x1 voice remote. And you can catch up on all the rdma buzz. With artist interviews. Past performances. And more available now on xfinity on demand. Xfinity the future of awesome. And to find out how to catch exclusive videos featuring rdma host jordan fisher. And the ardy goes to. Watch Disney Channel presents the 2017 rdmas. April 30th on Disney Channel. Caroline welcome back to the best of Bloomberg Technology. I am caroline hyde. Now to our exclusive conversation with the ceo of dropbox. The cloud filesharing startup has been touting Financial Milestones of the company inches towards a public offering. Dropbox is cash flow positive with annualized revenue of more than 1 billion. Houston told us they are also Free Cash Flow positive. I spoke to him this week in san francisco. Take a listen. It has been great. We have 500 Million People around the world using dropbox, 200,000 paying business customers, and a lot of milestones we are proud of, so in january, we crossed 1 billion revenue run rate. Turns out the fastest tech company in history to reach that milestone. Last year, we were Free Cash Flow positive. Today, we are also profitable on an ebitda basis. That matters because its a rare combination. It is rare for Software Companies operating at our scale, our level of profitability, and to be growing at the rate we are, so we are proud of that. Caroline profitability, the enigma. How did you achieve it . Cost efficiencies, the growth side . How did you manage to scale to that . It starts with our customers. People love dropbox. It is a testament to the strength of our business model. Inside the company we like to say we have 500 million sales people because all those millions of people have brought dropbox into millions of businesses, and that is how we grow. So the vast majority of our revenue is selfservice, so you just pay with a credit card, which means sales and marketing costs are lower. When you combine the scale and efficiency, thats the increase. Caroline it is interesting you have helped dropbox to lower the cost of business in an awful lot of other industries in areas. Where do you see these sorts of efficiencies going in terms of technology in general . Im interested in your viewpoint on whether you are an optimist or pessimist . As to whether technology is pushing forward in helping efficiencies work . At times there will be disruptions. How do you feel Silicon Valley is adopting that . And the administration adopting that . When you zoom out, technology is progress. There are a lot of great things about that. That is the story of humanity and our evolution, but when you zoom back in, one thing we talk about is that for every problem that technology solves, it feels like it creates a new one, so things like email and thumb drives at the time are these great inventions, but when you look at it another way, they are holding us back. So fortunately a lot of these pain points become opportunities for us. Whether it is frustration around thumb drives, thats just one example of a broader problem we are working on, which is work about work. So when you add up all the time we spend looking for information, emailing and all these things, it is 60 of our time is spent on overhead, work about work, so we are trying to knock that number down as much as possible because it is a huge waste. Then when you think about tech more broadly, i think we will end up in a good place, but at the same time as Technology Creates new problems come up we have to be mindful of that and solving those. Caroline when you say we have today, is that for the entrepreneurs and Business Leaders to be looking at . How much do think the administrations in the u. S. Or globally needs to be looking at it . Whether a company or government, we are part of a broader community, so it is something everybody has to look at. Caroline when you look at the Current Administration in the u. S. , theres been rolling of eyes and exhaustion coming from Silicon Valley, and many times feeling whether it is the travel ban, h1b visas. It has been an unpredictable 100 days or so. And look, sure, a lot of positions that the administration has taken on things like the executive orders on immigration are really troubling. My cofounder, his parents emigrated from iran, so if that kind of legislation or that kind of thing was in effect now, there would be no dropbox or when we started. And so, tech, we are all rallying together and figuring out what we can do to engage. Caroline rallying together in Silicon Valley, is Silicon Valley at the best place it could be right now . Some of the reputational damage that is happening at the moment, is that something you want to fix or is it thriving as its always been . It is always complicated. We focus on things that are in our control. We see it. We talk to customers, there are a lot of problems out there. That is where the bulk of our attention goes. Caroline i want to get a little bit of insight as to where you tell other entrepreneurs to go now. Reach out to our viewership, those that are wanting to be the next ipo, see their Business Scale such as yours. Do you have a recipe for success . When it comes to a lot of these problems, one thing that was surprising to me is that it is easier to go after big problems than small ones. Because i thought it would just be harder because the challenge is so much bigger. But actually what happens is people are really motivated, inspired to take these things on. It is easier to attract great talent. My advice would be to set your sights high. Caroline that was the ceo and cofounder of dropbox to houston. Now to weibo, commonly known as chinas twitter. 500 Million People using the microblogging site, and its Parent Company has enjoyed exploding revenue growth. The Chinese Telecom giant says it is because of the rapid uptick of weibo users in rural areas. Chairman charles chow spoke exclusively to bloomberg about how he plans to keep driving forward. Last year, we grew revenue by 100 to 110 , so that is very big. That moment is continuing this year, so you will see growth in revenues. To a lesser extent, from feebased services. Weibo, the messaging service that provides some much of your revenue stream, you have done a very successful job in growing weibo users in secondtier and third tier cities in china. Where are your new markets . We will grow faster than our competitors this year, but the overall market is slowing down. So we are going to focus on the competition and will increase more sticky products and more diversification in offerings, especially the video area. You see that we have tremendous growth in terms of usage and to increase in usage and Live Streaming products. We had just started to beta testing video stories like the ones snapchat has, so this is an area we will be focused upon. Video is the key for future growth. You said you think there is too much money flooding into the tech sector. Are you suggesting bubbles in chinas tech sector . If so, where . It is everywhere. Its not just one particular area im talking about. Im talking about internet in general. Especially in the last 56 years. There is a tremendous amount of money pouring into markets, whether foreign firms are local firms, there is too much money. That is why when a new concept emerges like streaming for example, like the shared the economy, then you see not like dozens of companies being created, hundreds of companies being created, and in theory these companies will not be successful, but when they have a concept, they think it will work. They dont want to miss this there was a lot of money flowing into creating new companies and you businesses. The result is huge competition in terms of market share to get bigger. So a lot of competition is irrational in a way. Caroline that was the sina chairman with the tom mackenzie. Coming up, tmobile came out with earnings this week, picking up more subscribers to gain ground on rivals. We will speak with Ceo John Legere next. If you like bloomberg news, check us out on the radio. You can listen on the Bloomberg Radio app, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. Caroline tmobile has set a high bar and cleared it again, picking up more subscribers to gain ground on rivals verizon and at t. The u. S. Carrier assigned 900,000 customers in the First Quarter, showing some serious growth. Tmobile net income rose to 698 million. From 479 million a year earlier. We caught up with tmobile president and Ceo John Legere. Our fouryearold birthday is on may 1 since we became a public company, and 16 quarters in a row we have added more than one million customers. We are highly consistent. We had 1. 142 million net additions. 914,000 additions were postpaid net ads, and 798,000 were postpaid phone subscribers. Here is the piece thats interesting. We estimate we took over 250 of all the growth in the industry this quarter, so a gigantic percentage. 386,000 prepaid nets. Churn at a record low of 1. 18. Service revenue and total revenue grew 11 and adjusted ebitda normalized grew 21 . That is in an industry where no other carrier grows Service Revenue and hasnt for years, so we are thrilled with the announcement of the accident, along with the gigantic win in the low band spectrum options. It sets things up beautifully. Caroline talk to us about that 8 billion you are splashing on spectrum. How will it be put to work . It was a historic low band spectrum auction, 600 megahertz, moving from the broadcasters over. It was a oneyear long process. We won 45 of all the spectrum in the auction, 31 megahertz of low band spectrum, and increased our overall Spectrum Holdings by 39 . We now have three times as much low band spectrum per postpay customer as verizon does, so it was important for us. The spectrum we got covers every single inch of the United States and puerto rico. It is that beachfront spectrum that goes in buildings and covers rural areas. What we are already doing is we are growing our retail footprint by 30 million to 40 Million People to use the spectrum and take the competition which up until now was only in two thirds of the country to every inch. It is historic and exciting for us. Caroline does it make you more even more valuable . We have to talk about consolidation. You talked about it in january, saying you see 2017 as a year of consolidation horizontally and vertically. Are you going to be a player in that . Yeah, now the anticollusion Period Associated with the auction ends on the 27th which is thursday at 6 00 p. M. So i cant comment specifically. What is important to understand where all this hype is coming from is that there are great opportunities for wireless players and adjacent industries to bring capabilities together to serve customers in a better way and increase value. Number two, nobody has been able to talk to each other for over a year. Number three, there is an expectation that the new administration will be more lenient from a regulatory standpoint. And youve got three or four people who have admitted they need to do something. Dish, sprint, comcast, etc. Tmobile from a strong position, much more valuable, we have the opportunity to continue to grow, but we also on behalf of shareholders and customers will be interested in looking at the opportunities that we might further accelerate that growth and serve customers better. Caroline do think you could serve customers and shareholders better with a horizontal deal . Would it be better to team up with other mobile suppliers, or do you think its better to get into the content . Well, yes, yes, and yes, right. I have often said that what is happening can be easily summarized as all content will go to the internet, and all internet will be viewed mobile can define where things are going and what structures will take place. Tmobile could be very strong by itself and continue to grow. We could consolidate with another wireless player and get scale and bring competition even greater. We could come together with a cable player from a standpoint of convergence that makes sense over time. Remember, when all content goes to the internet and the internet is viewed mobile, we have 73 million and growing people who get their monthly access to the internet and content from tmobile, so i think there will be a lot of fascinating things happening. Most importantly is we are strong, we are profitable, and have given 45 to 48 on Free Cash Flow growth and our stock was trading at alltime time high today, so we feel very good about all options. Caroline stocks just dipping a little bit. As you said, we are at heady highs when it comes to that particular number, but what about future profitability and competition . You have done so much to disrupt in a field of four, but they are copying you. How can you say your average revenue per user will remain stable and you will keep on adding more users . Because we are the competition. And you say they are following. We are dragging them kicking and screaming on behalf of the consumer. Four years ago when tmobile became a public company, we announced that we are going to fix a stupid, broken, arrogant industry on behalf of consumers, and i also would point out that the 13 uncarrier moves are industry changes, permanent, and there is more coming. There is so much more to do, and we want the industry to change and follow suit. We will have stable rpu but there is more change to come and our competitors know it and are struggling to keep up with us. Caroline coming up, chinas ride hailing app didi is near the close of a massive funding round, vaulting the company to another level in the startup world. Details ahead. Plus, traditional retail has been suffering from the rise in ecommerce, but one company is bring on some hightech features to improve the instore experience. This is bloomberg. Caroline didi chuxing is close to a milestone. The chinese ride hailing giant is near an agreement to raise 5 billion to 6 billion making it the most valuable startup in china. Surpassing smartphone maker xiaomi. The round will lift the valuation to 50 billion, up from 34 billion after its acquisition of ubers china business. Thats according to people familiar with the matter. We went live to hong kong with bloombergs lulu chen. Didi is raising 5 billion to 6 billion. They are close to closing the fund. The Main Investors include softbank, silver lake, cnb, and like you said, at 50 billion valuation, they are chinas largest starter, surpassing xiaomi on a global scale. They would rank only second to uber. Caroline quite phenomenal, two ride hailing companies, the most valuable startups in the world. What will didi be doing with its money . Will it be taking on its formal rival now frenemy . They have different areas they can explore. The money is coming in a timely fashion. They have been very tough on the company, especially since the Chinese Government issued these stricter regulations that have hampered and main revenue stream of theirs. So despite some more time to develop revenue avenues and the delay of a possible ipo floated as an idea last year according to people familiar with the matter, in terms of other areas they can explore, driverless technology. They are locking heads with uber and google in those areas. Didi still has global aspirations and an ally with grab and ola. Also in india. They are competing with uber on those fronts. Caroline tell us about the other regions they are trying to get in. Have they been successful . Has it been a hard slog for them . Right. Well, didi has taken an approach to partner with local competitors, local operators like ola in india. They are not actively building out an organic business on the ground there. The same case with southeast asia, and also regions like south america, which they said they awful has interest in expanding in. Caroline fascinating we could see an ipo from china faster than we would see uber going public. Talk to us about the regulatory hurdles they have had at home. You mentioned some Revenue Streams have been hurt in china. Which ones are we talking about here . For didi, the majority of their revenue comes from their private Car Hailing Service and theyre fast car service, basically think about it as uber x, and the Chinese Government has issued these regulations across dozens of cities across china, especially beijing and shanghai. They have limited the number of people who can drive on the road to only local residents, so this has cut down their revenue stream in those sectors, which has been their main revenue, their area for profit and what investors were looking forward to when it comes to talking about a potential story for an ipo of the company. Caroline thanks to bloombergs lulu chen from hong kong there. Now, with connected clothes rails, online farfetch believes that has created the store of the future. Using the latest software and hardware, the retailer aims to help Luxury Brands gain more information on customers instore and online. Bloomberg went to Londons Design Museum to take a sneak peek at what is in store. Online retailer farfetch is betting it can shape the future. This is a Concept Store showcasing the latest in retail tech. How do you capture all of that fantastic information you gather in store with customers touch and feel products . We have created a product called the connected rail. It is a combination of rfid and ultrasound. The rfid signal recognizes the product and the ultrasound recognizes the movement. You take the product off and start to see your products appear. Essentially it is like online browsing. Whichever product to touch and pick up instore are automatically sent to your app. This is effectively what you created, your instore wish list. In the middle, you see a hologram of the product. They control the experience on a touch device. What it allows the customer to do is take elements of the products and add their own style to it. Right, so this is the connected mirror. In this example i see my products. I select a coat, and that is slightly too big for me, so i choose an alternative size and send a request to the sales station and they will bring that size to me. You also see we have some product recommendations here. Sales are able to push items into the mirror from their devices. If you wanted to, you can pay and go. Your items within the pack and dispatched to you afterwards. Caroline that was the Bloomberg Technology team reporting from london. Now in this edition of out of this world, nasa astronaut Peggy Whitson set a new record, the u. S. Record for most cumulative days in space, surpassing Jeff Williams record of 534 days. To mark her accomplishment, President Trump offered his congratulations saying, on behalf of our nation, and frankly on behalf of our world, i would like to thank you. While an impressive feat, it does fall short of the world record of days in space which is held by a russian cosmonaut who spent 879 days in orbit. Now that does it for this edition of best of Bloomberg Technology. Next week, we will be live in los angeles with a great lineup of guests, including david solomon, president of goldman sachs. Remember, all episodes of Bloomberg Technology are now Live Streaming on twitter. Check us out at bloombergtechtv weekdays. That is all for now. This is bloomberg. Welcome to bloomberg businessweek, i am oliver renick. In this weeks issue, venezuelas issue, venezuela slides from prosperity to poverty and then chaos. And then we go to canada. Justin trudeau the Prime Minister opens up to John Micklethwait about working with president donald trump. And the the proceeds, bestselling author. All that ahead on bloomberg businessweek. W