Transcripts For BLOOMBERG Bloomberg Technology 20170105

Necessary deemed the delay his chargescause for hate crimes are ongoing. Im courtney collins, this is bloomberg. Caroline this is Bloomberg Technology. Backingp, the u. S. Not off allegations that russia was behind the data breach at the dnc. Details from the senate Cyber Security hearing. Plus, time warnerat t megamerger back on the brink. Why President Trump might get in the way of the deal. And titans from tech hold court at the ces in las vegas. From the future of cable tv to the surging home sharing market. The first two are lead. Security is emerging as a major tech concern for 2017, and it came to attention today at a u. S. Cyber security hearing where russia was front and center. Officials confirmed that russia was behind attacks during the president ial election. Intelligence officials said only russias most senior officials could have authorized the data theft. One day beforet president elect donald trump, who had previously cast doubt on the findings, is to be briefed on the hack. Bill from is washington. Agency seemsnce even more confident that russia was behind this hack. What do we know from this event . The three side chief sumitra mayhill today said they had more confidence than they did in october when they first released the are report. They pushed back quite a bit against some of the public criticism they have received by donald trump, who said earlier this week that a briefing had been delayed and that he thought it was because they had to still build their case. Thinkade clear that they they have a very solid case. They will be presenting that case to the president elect tomorrow. To twitterrump took once again, his favorite form of is talking and he about his association with julian assange, denying he is in agreement with julian assange, but that he is a big fan of intelligence. We are seeing between right now honors seeing the tweet right now on our screens. Were not as critical of donald trump as they could have been. Right. R these guys all speak in a very nuanced tone. They did not single out trump or his criticism directly. They did say public criticism of their work is not helpful, not good for morale. Is something they prefer happen behind the scenes. These are very skeptical people. Communityigence spies, they are skeptical by nature. They ask a lot of questions, so they are accustomed to that. I dont think they are accustomed to being put in the public eye front and center. We have never seen a time in the president sooming blatantly and publicly president so blatantly and publicly questioned their work before he takes office. There is a whole range of issues that the president elect will have to count on the intelligence agencies for, whether it is the latest ,ssessments of Islamic State chinas moves in the south china sea. Without that kind of information, the president is essentially lying blind. Flying blind. There is aomorrow, briefing that will occur with president elect donald trump. Reporter James Clapper was asked if he was ready for a spirited discussion with president elect trump. He said he is and he welcomes it. Used to toughre questioning. What we have learned from the president elects team is that they want to see more broad data and want to see a little bit less analysis. There is some concern on the trump team that the Intelligence Community has been politicized in the last decade or so. They just want to see the data and draw their own conclusions from that. Caroline thank you very much. A story we are watching, president elect trump remains at ttime warner megamerger, according to people close to trump. Trump is said to have told a friend that he thinks the merger would concentrate too much power in the media industry. Time warners shares have been climbing. Shares of both at t and time warner dropped today. Topicsecurity is a hot from washington to wall street, and here in Silicon Valley. Last month, yahoo announced it had suffered its second data breach, one of the largest in history, leading some to question whether verizon will follow through with the acquisition of the company. Cory johnson spoke with Tim Armstrong about what the hack means for the acquisition of yahoo . Yahoo deal for us is strategic towards our 2020 goals. We are hopeful it will close. The process is split into two areas. One is the integration and strategy planning with marissa and the executive team at yahoo , which has gone very well. Informationiece of that has come out about the breaches and what the effect of , verizon is handling the research with yahoo , yahoo is going through their investigation, so we want to have any comments because yahoo has not finished their investigation yet. But we are on track and hopeful the deal will close, but no more than the first half of this year. Is doing ateam thorough investigation, so i am sure they will have more to say about it in the time in front of us. Is it possible that these series of hacks and the publics knowledge of them has any effect on the brand of yahoo in any way . Guest i think thats one of the things yahoo is looking at and will continue to look at, the total effect of what the breach was and what the outputs of them are. Of course, we have a viewpoint on that as well. What i think from the standpoint of where we sit right now heading into 2017, our strategy is clear. Adding towards 2020, yahoo is one piece of that strategy. As we get more information, we will update. I will say that from what our goals are and what we have been tasked with getting done at ando , it remains on track, the investigation is still ongoing. That the size of the business of yahoo is not properly understood generally. It is just such a very big business with so many users. When you look at that asset, what do you see that holds such value . The noise, concern over the breaking tends to dominate the discussion. What you see as the underlying asset in this value . Guest we live in a world today in which there are hundreds of billions of dollars and millions of consumers coming online that are all Digital First and mobile first. Yahoo is one of the largest footprints in the world on the consumer side. It has a large advertising and ecommerce business. From our standpoint, what we look at the combined assets, we would have over one billion consumers, do billions of dollars in ad revenue, and have , very big footprint in mobile added with verizon, which is very strategic. Getting mobile consumers is huge. The breachre is information and breach investigation, but from a Business Strategy standpoint, especially when you look toward the next five to 10 years, the assets coming together represent a unique opportunity and scale. We have gone from Company Consolidations and industry consolidations. Verizon has been very forward thinking, very clear on the execution of where they think the world is going to india and going inand mobile media and wireless and mobile. We are excited overall, and there is this one issue that needs to get resolved, but i have looked through that to look at the strategy, and i think the strategy remains intact. Think it is interesting that the strategy of consolidation is very different from at t to verizon. On the verizons side, i see you guys putting together a big pile of assets. You mentioned to and yahoo sports and pulse and aol and all smaller pieces of content, but a kaleidoscope of them, whereas at t seems to be going big with time warner, hbo. I wonder if you can contrast those two strategies for me. Guest sure. I know the time warner strategy well. I was with time warner when we spun off of aol. A lot of respect for the team at time warner. At t dont know their strategy and dont know exactly what their Business Model is, but i do know the Verizon Business and the aol plan, which is essentially to bet on where the future is going, which is very strong connectivity with 5g, and connecting everything and everybody with fiber in speed and wireless connectivity. The second piece is digital consumption of content. You dont have to look far and wide to see how much the linear a landscape has changed to digital focused consumer. I think if you contrast the strategies, you looked out five or 10 years, that digital focused, mobile focused content strategy that verizon has put in the place is a very strong strategy. After spending 20 years in the look on valley and new york and across the globe, in Silicon Valley and new york and across investbe, we wanted to in mobile, because the connectivity will be a tremendous asset. Companies, twog strategies, and a lot until wins in the future for growth. Feel very confident in what verizons strategy is and the leadership of verizon has done a very good job exit and longterm strategies executing longterm strategies. I have no doubt we will be a big player in the future. Caroline that was aols ceo, Tim Armstrong. For more, we are joined by cory johnson. A very confident sounding Tim Armstrong, focusing on the value that lies in yahoo despite the attacks. Cory i think thats the story here. I think the reaction was overdone, not because of. Ahoos core business but you hear from Tim Armstrong, they see themselves as one of the few assets in the world that has a Global Internet audience of over a billion evil. Y look at things like they over a billion people. They look at things like facebook and snapchat, and they figure with that content in those users they can have a big global audience that will be poised to dominate when 5g rolls around. M a hit some roadblocks today. Where do we stand on the whole m a front for 2017 . Cory those comments are interesting. News was broken that people close to trump by people close to trump that they are still concerned about that deal. Will this be a free market, Goldman Sachs white house that once things to trade or they want to trade and wants businesses to combine, regardless of their impact on society, or is this going to be thatonald trump suggestion he will actually review these things and look at the impact of these business combinations and be less likely to approve these mergers . Is important that there is a media story here. There may be a different approach for the media. People think more voices in the media are better than fewer voices, and they might have a different approach to media than other kinds of widgets and mergers along those lines. Caroline and of course, the 20th century fox deal with sky across the amanda, and whether they come against that as well. Afterl have plenty more the break. We will catch up with hps ceo on the companys global aspirations, next. Stocks closed mixed on thursday, but the nasdaq ended the day at an alltime high, merrily0. 93 points beating the print narrowly beating the previous record. One company touting their products at this years trade show is hp. The company has announced a bevy of new gadgets, including the ultrathin convertible laptop and pro, an all in one pc. The chief tech officer. Us why we should be excited about products in an industry that has been stagnating. Guest first, i am super excited to be here. Way tolways the best kick off a new year. Especially when you are bringing the best products. We are about a year postsplit, and we are in the middle of rebuilding the company, and that includes some fantastic anducts, the elitebook 360 the sproutpro, a refresh on our original sprout product which is exciting. When you look at analyst expectations, they are showing that revenue should stop picking up at hp by 2019. How many of those products are crucial to that . Best way to answer that is what we are trying to do is really look at what our strategy is and spread it out across three main factors. Have core, future, and growth. On the course side, we expect that to be our core personal systems and print business, and in the growth area, weve got some super exciting things that are going to happen this year, and that includes things like our graphics business with the acquisition of samsungs printer future, and in the super excited about 3d printing of the opportunities that will provide in digital manufacturing. Caroline where is the demand coming in 3d printing . Are we finally there . Guest yeah, we are. Did launch and ship our first products here in october. Those are some of our customers in europe. That product is going to be a tremendous hit. It delivers 10 times the speed of any product out there, 50 of the park cost. It is all done in an open ecosystem with substantially better parts. Wet is the beginning of what expect will be a true revolution. We are at the beginning of what we think is a 30 year view of reshaping manufacturing into full digital. You are a fascinating man to talk to her, because you have been an angel investor, you have been a cofounder. Are you looking at the acquisition potential of these startups you are building within your company to help harness this growth . Guest yes, we do. We do two things from the cto standpoint. One, obviously invest in the Core Technologies we have internally. As the founder and the person who runs the hp tech ventures, we are definitely on the outlook for the Exciting New Technology on the horizon. That could be through a variety of things. It could be through partnerships, and believe me, we have seen a ton of answers a ton of Interesting Companies here at ces, it could be through an investment, or we could look through acquisitions. These new growth opportunities, they take rmb and money, and hp is a company having the caught costs cut costs at the moment. Are you worried this can Impact Investments at all . Actually not, and heres why. One of the great advantages of the split is that we have been able to focus on what our core markets have been, printing, personal systems, and moving into the 3d side. As we look to streamline the business and make sure we optimize a cost, one thing we have not cut is r d. We have not only kept in constant, but we have been able to spread it out, so we are making bets in the longer term, and that gives us growth possibilities in the future. Thinking outside the next two years, five years, what is capturing your attention at ces . What is the main shot you are banking on an hp . Guest it is interesting. Its always great here at ces to see those longerterm things coming out, like whats going on in automotive or the internet of things. Done is putwe have together a vision that is 30 years in the future, a kurd around a simple notion we call blended reality, a believe that the Digital World will become much more inexplicably twined with the physical world, and those will blend with each other, and that leads to investments longerterm, 3d, moving to digital manufacturing. There is the internet of things, which we all know about, but what we are super excited about is the internet of all things, physical items that dont have technology and are today connected to the internet. Liddedk the notion of reality gives us a tremendous opportunity to pursue these areas. Cto shane wall, thank you for joining us. Still ahead, we will get very dennis take on the latest news that donald trump remains opposed to the megamerger between at t and time warner. This is bloomberg. Playing 70lmart is million for a Company Called shoebuy. It competes with a more wellknown site, zappos. Last year, they bought an online furnishings store called pay needle for 90 million. Meanwhile, amazon is moving in the other direction, expanding its presence in brickandmortar stores. Amazon is planning to open a bookstore in manhattan near central park. They already have bookstores in california, seattle, and oregon, with plans to open more in massachusetts. It opens this spring. Ford is putting the companys digital assistant alexa in its cars this summer. It will allow divers to order items on amazon, listen to audiobooks, and get directions. Come, former new york city mayor Rudy Giuliani and blackberry Ceo John Chen are teaming up on a Cyber Security initiative. The controversial cyber attack hearing takes place on capitol hill. We will hear their take on cyber defense, next. And if you like bloomberg news, check us out on the radio. You can now listen only Bloomberg Radio app, on bloomberg. Com, and in the u. S. On sirius xm. Intelligence. Officials say they are more convinced now than they were in october that russia did interfere in the u. S. Election. Is notte house characterizing the hack as an act of war, but says president obama takes issue quite seriously. Theresa may is scheduled to visit president elect trump this spring. She has criticized him in the past and both clashed over nigel farage. She went on a secret trip to the u. S. Last month as they tried to renew trade partnership. Thebegins her exit from u. N. In march, roughly as the same time as the u. S. Visit. Are angry about gas prices. Walmart was one of the stores targeted. Officials say a car bomb detonated in a Commercial Area in central baghdad killed at least seven people, the latest today in a series of deadly attacks. Other attacks across the iraqi killed 16 people. And the pentagons top weapons buyer has approved advanced development of a new generation of submarines. They could cost up to 126 billion. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more 100 20 countries. This is bloomberg. It is just after 5 30 p. M. A. M. Day in new york, 9 30 friday morning in sydney. Im joined by david with a look at the markets. David, good morning. David good morning, courtney. In new zealand, the markets opened narrowly up. Futures and australia pointing up 0. 2 today, and futures in the nikkei in japan down 0. 4 . Today we are going to be looking at australias trade balance data. Analysts are forecasting that will narrow to its narrowest is 2014, 550 million. That is due to better prices in iron ore and coal, key exports for australia. We will also be looking at india, which will reveal its estimates for thirdquarter gdp today. We are also watching samsung electronics, preliminary annual results today. You may think it is bad news for samsung with some of its bad news about smartphones, but shares hit a 42 year high on tuesday. Those are at some of the things we will look at today. Bloomberg technology continues next. Caroline this is Bloomberg Technology. Haveintelligence chiefs confirmed that russian government officials authorized hacking during the 2016 election campaign. National intelligence director James Klapper and nsa director Michael Rodgers said the Intelligence Communitys confidence in their findings is very high. Meantime, former new york city mayor Rudy Giuliani announced thursday his Consulting Firm is partnering with blackberry on Cyber Security software. John chenckberry ceo spoke to bloomberg earlier. Mayor giuliani hypotheticals are not good things to respond to. Theft,ntrusion, cyber cyber crime. The director of the fbi, james comey, says there are two main types of companies in america, those who have been hacked and know it and those who have been hacked and dont know it. It is becoming ubiquitous. The Reason Companies and countries need us is because we can come in and we can tell you whether you have the best possible solutions and. You may have solutions, but not the best possible solutions. Second, you have to keep changing your solutions, because if you do the same thing for two or three years, the hackers will figure out and they will get in. Dispute about the russians in the chinese, all it does is underscore the fact that we have fallen way behind in cyber defense. Ahead in cyber initiatives, information gathering, information analysis, using it for cars in whatever. It is like our defense has not been on the field. We have to bring our defense up, blackberry,what giuliani partners, and others we hope to work with will be able to help us do. I like the way you put that, yet the National Intelligence it ises have assessed hacking by the russians. Why do you disagree with their conclusions . Mr. Giuliani i dont. I have not seen the reports, so i cant comment on it. These conclusions are always percentages. I have done a few of these, and these are percentages. What they will give you is the was chance that it lets pick another country that it was north korea. I would want to look at that, and then i could give you an informed judgment on it. Its not a political issue, its a technical issue. Mr. Chan, what is your level of concern about Cyber Threats from foreign governments, even those we might not have possible relations with . Very high. Said, iector comey never heard him say that, but i will quote what the mayor said earlier, every company has been attacked, and i think the attacker comes in all forms, some friendlier than the other. Say that we are looking at other nations. I would suspect that the government has been involved in this also. Think giuliani, do you the administration did the right thing in announcing those sanctions last month . Giuliani i will have to leave that to the discretion of the president. He acted on the information. I have no way of secondguessing what he did, nor will i do that, but i do want to underscore what sean said. What john said. Ubiquitous. It is happening all the time, and you have to have defenses against it. Itis also important to catch early. For example, the hacking of opm, 20 million identities were taken. They ran opm for 10 months, 11 months, 12 months. Thats why they were able to get millions of identities. Had they been caught in the second week, third week, or the fourth week, or even the fifth week, you could have stopped it. That, andthings like thats what we are going to be trying to do, not only stop it, but catch it early like cancer. If you catch it early, you have a much better chance of hearing it curing it. Up, softbanksg sung pledged 50 million to create jobs in the u. S. We will catch up with the ceo, next. This week on bloomberg television, we bring you our best interviews of the week, cia cyberwith the security director. We will get his take. This is bloomberg. President elect trump has a plan to make America Great again, a part of the plan, bringing jobs to the United States, with the help of softbanks chief executive. Mr. Trump he has agreed to invest 50 billion in the United States and 50,000 jobs. Men ofne of the great industry, so i just want to thank you. In december, the First Investment was made to fill 3000 positions. Satellite start up oneweb said with the money, Japanese Technology Company Provided the bulk. Since then, softbanks funds have been drawing the attention of other tech titans. This week, apple said it was planning to invest in the fund. Qualcomm also said it would participate. According to those familiar with oracles Larry Ellison also intends to contribute. The fund is set to close at the end of the month, so we will wait to see who else throws their hat in the ring. Joining me is oneweb ceo. It is the First Company to receive investment from softbank. Welcome to the show. 000 jobs over four years is the talent ready and present red in the u. S. . Guest i think it is. We are growing fast. We have a lot of job openings on our side, we are continuing to look for more people. There certainly is a lot of talent. Abroad, woulding you be concerned about restrictions on visas, or is this something you can add to jobs in the United States . Are global, so we have jobs or of the world. In the u. S. , we do in a cage and have issues with visas. It is nice to have easy transport of talent across occasionally have issues with visas. It is nice to have easy transport of talent across the globe. But we have a lot of kids coming out of college now with an amazing skill set. Caroline how much the you think donald trump or Masayoshi Son for these investments . We raised about 500 Million Dollars last year. We put a plan together to raise 500 million this year and 500 million next year. We are building a satellite system that will provide very high Speed Internet access to the other half of the world, the 4 billion people who are without access. That is a very large program, and it is very much related to bridging the digital divide. By 2020our mission seven, and to connect every school in the world by 2022. Masa looked at our mission, howly embraced it, and saw important it was for humanity to allow everybody to have access to the worlds information. His contribution, his investment has been extremely helpful. He met with president elect donald trump, he increased his investment, and thats great as well. We ended up with a 1. 2 billion dollar investment now, which was more than we expected when we went out to raise funds, and puts us in a really great position to accomplish our goals. Caroline this is a great vision you have in terms of connecting those who are not connected, one you have dedicated much of your life to. In terms of why now, because other companies have tried to do this, sending constellations of satellites into space, why is the time right . Guest things have changed a lot. You are right. There has been a lot of failures. It is a path littered with failures. There are thousands you have envisioned doing Something Like this. Only if you have raised some money and very few that get built. Wereone or two actually built and it not go bankrupt. One of them i was fortunate enough to have founded. Thesevery hard to do things, but if you keep a very good eye on what the machine is the mission is and who the user is and how we will effect that change, and you have to have it in your gut. It is a mission as much as a business. With the technology and processor advances with our incredible partners like qualcomm, the leader in cellphones and building chipsets and handoveres between cell towers at extremely high speeds. We were handing over 100,000 separate Internet Connections a second. There are chips that have been invaluable for us to accomplish these goals. How do you square that awkward circle of a mission and a business with rough it . With profit . You are working with telcos to price this. Are you sure the right people will be able to gain access . We are just trying to enable access. A utopia may happen after that, but we have our mission. On pricing, we are building a system at a scale that allows us to provide services at a very low price and meet the two dollar a day type of income that ldcsople in the lower have. We designed a system to accomplish those goals and do it profitably. The markets in the developed worlds can pay more, and the markets where you think about andlity for aviation maritime, for instance, they will have a higher price, said the whole thing squares together to be profitable and also accomplishing a very important goal. Awkward question, but on balance, from what you have seen, president elect donald trump, positive for your business or negative . Guest so far, so good. The market has spoken, and in the future we will see, but so far, so good. Wyler,e greg thank you for your time. Up next, iac founder and chairman radel are joins the barry diller joins us from las vegas. This is bloomberg. Caroline donald trump is said at ttimesed to the warner megamerger, and shares dropped on the news. Media mogul barry diller is the chairman and ceo of iac, a company comprising more than 150 brands and products, including dating site match. Com and Video Service vimeo. In lasht up with him vegas and asked about trumps position on the big deal. Reporter if your stock is orject for more than a day two to his comments being a negative drag on you, that youve got a very lousy its all todays ridiculous silliness. There were some merger efforts last year in a similar state. Cbsviacom fell apart area do you see any likelihood of that being resurrected . Guest it would not have happened anyway. Reporter why the you think that . On the cbsou are special committee representing the shareholders, you are not viacom at anything but a bargain sale price. If you are on the other side of the special committee, you are not going to sell it at anything but a premium, so its never going to happen anyway. Tried to how would you turn around paramount . Can it be done . Guest to make good movies. It aint hard. The movie business is the simplest business, compared to what is going on here and the changes in the world. Narrative storytelling on a big screen, or a small screen, but on a big screen is very simple. You tell it,ory, and people either like it or not. There is no tech involved. It is quite binary. Reporter on the flipside, a lot of Tech Companies are increasingly looking at the content space. Netflix is an example. Amazon has made huge strides in the space. There is talk about apple getting into the space. Do you think Company Needs to own content to get into it . Guest no. Reporter why is that . Guest if you want to own content, you have to distribute it everywhere, so these Tech Companies that are engaged in distribution, they are essentially distributors. Any content. They dont need to own directly the content. If they are going to actually begin to produce content insults content themselves, thats another thing, but thats something you have to really have a nontech aptitude for. You have to have the ability to make editorial choices. Vimeo signed a deal with lions gate. Im curious how that came about. Guest we are developing vimeo for a platform for everyone to use. We went to one or two people and said, your programming on our platform . They said, yes three at we will do much more of that. Reporter are there any deals pending that we need to keep an eye out for . Guest yes. Reporter can you give us a time frame . Guest no, no. Look, we are very much now in business, so weeks, months, this. We will be at we think that because we have an independent platform that is not owned by any totalitarian company, that we have an inch and a chance. Because of that independence, we can barrel through. When does that mean you talk about tv and film, you talk about netflix and amazon. Will it be netflix, amazon, vimeo . Will you be a direct competitor to those guys . Guest i would like to thank indirect. Andlix will always be there must a monumentally screwup. They have such size right now that i dont think anybody will be close. Mean that they take essentially the market shareof the world area of the world. There will be plenty of room for niche programmers and programmers that have many millions of subscribers, just not at their level. Reporter what is your take on the way the cable tv bundle was developing. Is it dead . Is the new approach killing it . Guest i dont think anything really kills anything, like dead dead. You have had for 40 years or so cable being the only place that you could get a bundle of programming. That has ended. Now you can get all you need with an internet connection, and you can get a la carte, little bundles, etc. Cable just has to evolve. The space of warehousing everything and selling it for one package price is gone. Reporter what are you particularly bullish on for the model that does go through . That the Cable Operators are now essentially in the Data Transmission service and no longer really in the Program Business. They used to be in the Program Business with very healthy margins, there was a decrease. Now when you have so many different alternatives, they are in the data business. Thats a different competitive edge. Does that explain some of the rationale behind the at t time warner deal . There seems to be skepticism. I dont know if you think there is logic behind that deal. Just dont think there is a lot of industrial logic behind it, because i dont think that a data Company Needs to own a content company or tech company, at t, needs to own content. They can buy content at fair market prices. No content, i think, in this area is going to be particularly exclusive. That was iac chairman barry diller and alex webb of open Bloomberg Technology Bloomberg Technology. Still to come, betty liu will speak with tmobile ceo john legere. You dont want to miss that conversation. Tomorrow we will hear from fitbits ceo james park, as well as the president of sony and baidu. Episodes are now Live Streaming on twitter. Check us out. Thats all for now. Have a great evening. This is bloomberg. Announcer from our studios in new york city, this is charlie rose. Charlie we begin this evening with this, the new congress began on tuesday. House republicans reversed their plan to strip the house of ethics after their independence. The review came from whoidentelect trump question why lawmakers were making it a priority. The focus today shifted to obamacare. President obama met with democrats to discuss their strategy for presenting and preserving his largest his signature legislative