Transcripts For BLOOMBERG Bloomberg Technology 20170316

To getting the regime to dismantle its nuclear program. Met with the Foreign Ministers in tokyo. He will head to south korea tomorrow. Global news. 24 hours a day. Powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Caroline im caroline hyde. This is Bloomberg Technology. Waymo and uber thatll it out. The latest on what may prove to be an robot roadblock on bloombergs autonomous ubers Autonomous Car trains. And visas are in the spotlight again. A new study supportss trumpss claim that visas support hurt the workforce. Two Silicon Valley giants facing off. Company plansthe to go to private arbitration within two weeks. Are involved in a dispute. Stolenays uber is using secrets obtained from a former executive. Our new legal reporter ones as on the phone. You have been to the court reporting. You broke the headline that they will be seeking arbitration. What does that mean in terms of the process . It was a routine hearing. This is a bit unexpected. Uber said it would push the entire dispute into arbitration. The larger picture is that waymo blockg a court order to over from using the technology. An arbitrator might be able to rule on it. Caroline wouldnt it make it less public in terms of the battle in the courtroom . Not dealtthey have with it in a Public Relations point of view. That is at the top of the list of what would be most beneficial. We would not be talking about it like this anymore. Closed doorsehind and not in a public courtroom. You and i and the rest of the press would not get the information that we have so far Going Forward. Beo, any award would confidential. Begoogle one, an award would confidential. If kluber one, that might be confidential. We would be less likely to learn that information in arbitration. Caroline take us inside the courtroom. What is it like . What is the tension like . The lawyers on both sides are very wellestablished Silicon Valley lawyers. Ive seen them in highprofile disputes, like apple versus samsung. It is a real polished and professional loyal lawyer familiar with technology and each other. The judge is an older guy. He is cranky and irritable. He does not put up with much. I think that could be one reason that uber wants to move this into arbitration. In arbitration you have more control over the decisionmaker. If they do not like the judge, that night might be another reason to move it into arbitration. Caroline thank you for painting the picture for us. Legal disputes is a complex one. It is featured in bloomberg businessweek. This reporter wrote the story. It is the lead story of this bloomberg businessweek. What fascinates me is that this when waymomonths started investigating what happened to their data. Selfter waymo is googles driving company. They renamed themselves on the same day an employee received a accidental email. That is when they move this into an internal investigation and lawsuit. Formerim is that employees stole Critical Technology for self driving cars. Caroline also, the self driving truck unit that uber bought, that is what sparked the investigation. The founder had been working at the google self driving car unit. That heeveral companies had separately to google. Reporter this shows the changing nature of google. This is really rare for the company to go after a former employee like this. This employee is a good example. Was described as a rogue force of nature. He was running Side Companies that google leaders knew about. They kind of encouraged it. Caroline they bought them . Reporter yes, some of them were foundational to their mapping and self driving car company. Caroline this is unprecedented for google to go after and start suing previous employees. It is against their egos. Ethos. Reporter this is the new structure at alphabet. The leader inn Autonomous Vehicle development. 90s the Companies Like tesla and general motors, ford and now uber are putting up competitive programs as well. This might be googles way of holding onto their technology. Caroline also, otto being bought by uber came as a complete surprise. They did not know until the deal was announced. Perhaps they felt they overspent. Reporter there is some tension there. Roboticspilfered the department at carnegie mellon. There is some tension there. They brought in a new boss to oversee them, without them knowing about it. He has been quietly consulting for months. Has said that he was planned to be acquired all along. Tooline i urge everyone spend a couple copy or two over this article. Amazing inside knowledge on what is been going on with uber and waymo. In the meantime, uber drivers across the globe are fighting for benefits like overtime and paid time off. Do the drivers actually work for the ride hailing app . That is being debated in courts. The reporter has more. Reporter are uber drivers contractors or fulltime employees . That is the battle uber is facing in courts around the world. They fight to keep the drivers classified as contractors. Uber claims it is not an employer just a platform that connects drivers to customers. Drivers valueuber their independence as contractors. As such, uber is not responsible minimum wage,vers providing insurance, or holiday pay. Critics say many drivers work more than 40 hours a week and should be entitled to these benefits. Authorities across the globe have taken different stances on the matter. In europe on wednesday, a paris tribunal this missed a request for uber to make Social Security payments to drivers. This after the u. K. Said drivers should get minimum wage and holiday pay. In the u. S. , uber and lift are arguing in courts from seattle to los angeles that drivers are contractors and preventing them unionizing and collecting overtime pay. In a statement, lift told Bloomberg News that its drivers are independent contractors and federal law prohibits independent contractors from collective bargaining. Under seattle law, uber and lift would have to provide driver names to the Union Beginning april 3. Caroline still to come, tesla taps the market market for more cash. This is bloomberg. Caroline Tesla Ceo Elon musk says the cash raised on wednesday is enough to keep them from seeking more cash this year. All in order to strengthen the Balance Sheet and reduce risk to investors. It comes at a crucial time as it prepares to roll out its model three. They have burned through a lot of money last quarter. Despite the new issuance, the stock is up. Joining us now is the Detroit Bureau chief and a senior automotive analysts. Thank you for joining me. I want to take it out to you, david. The stock is bouncing. What we have heard from elon musk says what . An 80 chance that he will not have to go back for more money. That is what one of the tech websites was reporting. Analysts are skeptical. Yesterday, we are still hearing something he will have to go back and get more money. Thatossible explanation is it will be a soft launch of the model three. We will not see a lot of production of the car. They will not be ramping up so rapidly. They will be holding quickly year, and that is when they would come back for more money, early in 2018. Convinced thatou 1. 1 5 billion is enough . They are burning like mad. Thanks for having me. I do not think it is enough. Im surprised it was not a bigger transaction. You have to strike when the iron is hot. There is a lot of positive sentiment in the Investment Community looking ahead to the model three launch. Hiser guest mentioned comment was accurate, we are going to see a continued spent as the model three progresses from a soft launch well into 2018 as they try to work their way over to 500,000 units a year overall. Im surprised they did not take this opportunity to raise more capital and put that risk off into the future. There might be potentially a larger than 1. 15 billion tap to the market. What about the money elon musk is putting behind this deal himself . He is buying another 25 million worth of stock. That is what he does, he borrows money, he secures it against his own shares in the company, he does not take a salary. The money he borrows from his underwriters is essentially what he is willing on. He continues to buy more shares. He has a lot of skin in the game, and investors like that. That is something they have always admired about him. He will probably have to come back and get more money though. That is the consensus here. Investors are prepared for it. Maybe it is a matter of waiting until the model three cash starts to stretch out and they get to go back to the market again. Caroline you think the price target is bullish. Does this mean there has to be a smooth process to the model three coming onto market . Have you factored in any other risk factors here . It has to be reasonably smooth. From the Third Quarter into the fourth quarter, then it is game over. They talked about the back half of the year. The implication is that there will be some production in the Third Quarter. Investors are polling suppliers right now and making sure they are on pace to keep on track for that thirdquarter soft launch or otherwise. They do factor is that not hit that target, that could be a negative catalyst. There could be more cash burn with a new product launch, as there is with any automotive launch. I look at Quarterly Results to look at cash going out the door and not knowing where was going, more than we thought for the model three. That is when you have to take a more balanced view. Theyre spending a lot of money on the model three, but also spending on infrastructure and extending globally. 1015 of what they are spending on our products we have not heard about yet. That has been the case historically. There are more negative catalyst around the corridors. Nevertheless, a phenomenal market capitalization still held onto by tesla. I have to ask you one interesting thing that has come to light. The day that the race was announced, we have a wheeling back from the cover government on Environmental Standards for cars. Does the incentive to buy electric vehicles diminish with donald trump in charge . Or does that not take away the demand . The hay is in the barn. The industry has invested in electric vehicles. Ultimately we will be investing in Autonomous Vehicle that will be electric powered. Consumers are warming up to the fact that they have 200 miles of range for a much more reasonable entry price. Residuals are holding up. Technology is holding up and proving to be a lot lower in costs of maintenance overtime. Auto manufacturers look into decadelong use when they think about investment strategies. There could be a big inflection in political will eight years from now, if not four years from now. I do not see demand falling off here. I think we have good products out there, good products coming, that will keep propelling it along from here. Caroline great to get your perspective. Wonderful having you on the show. Speaking of elon musk, his other x,pany, space act space has launched a Communications Satellite from cape canaveral, florida. This is the second launch from the Kennedy Space centers iconic launchpad on the apollo missions. Also they got a contract from the u. S. Military. It was a big win against industry giants. Had a 12, adobe straight quarter of revenue increases. We will take into the numbers next. This is bloomberg. Caroline a Company Continues to raise towards its goal of creating Autonomous Vehicles. The idea is that they will build a supercomputer designed for vehicles using their technology. Also, they confirmed a new partnership with one of the Worlds Largest makers of transport trucks. They will challenge other startups, including one owned by cooper. Adobe reporting firstquarter 68sults of revenue of 1. Dollars. Ed their stock to a record. Shares are up. Joining us to break down the numbers is bloomberg editor at large. Record profit and cash flow for the first quarter. Pretty positive quarter for this company. The stock price is at an alltime high for this company. It is a richly priced stock trading at 45 times earnings. They keep raising, and that is the name of the game on wall street. An interesting change for this company. Toward licenses and Downloadable Software with regular payments under users, and it is working. Caroline the shift to the cloud paid off. They have been on the acquisition trail as well. Moreare getting a few competitors as they expand. There is an interesting australian competitor. On the creative side, the Creative Business is not only growing, it is becoming a bigger percent of revenues. Lower,uarters ago it was now it is sticky 5 of revenues. The core Creative Business is growing even faster than their other businesses, all of which are growing. Is a new growth area. How is it doing internationally . We dont have as many breakdowns and categories for international categories. But apparently they are doing well overseas. They are firing on all cylinders. There is an underlying trend of Digital Content creators being created everywhere. More and more people are creating pictures and changing their pictures in adobe photoshop. They are getting more users into the area where they are already dominant. Caroline it successfully moved into marketing. Will they move into any other products . It has not growing as a percentage of revenue. Flat at about 35 of revenue. It has been that way for quite a while. It does not seem to be growing at a pace you might expect. Competition . Oracle it is more of an advertising product. Not so much oracle. One thing is the notion that this is the kind of company that can oracle might want to buy if it was at a lower price, but at this point, it will not happen. Caroline always great to get your analysis. Our bloomberg editor at large cory johnson. Of shares hitting a new record high, this after the company signal cloudbased services are taking up in earnings results. Offsetting the in Legacy Software licenses. Coming up, visas are in the spotlight as President Trump tries to crack down on immigration. Now a new study is not reporting that trumps claims hurt the American Technology workforce. This is bloomberg. Alisa i am Alisa Parenti and you are watching Bloomberg Technology lets check first word news. I wish Prime Minister enda kenny is offering to help irish Prime Minister enda kenny is president thelp speaking at the u. S. Capitol s1 of eventsrump, celebrating st. Patricks day including a oneonone meeting at the white house. Officials in the Southern France say a student opened fire at high school today, wounding 2 other students and the principal, who tried to intervene. Prosecutors on vista getting a link after aek letter exploded at the imf office in paris. One person was wounded. The incident came one day after a greek Anarchist Group claimed responsibility for a letter bomb sent to the german finance ministry. Britains Queen Elizabeth as given royal assent to Prime Minister Theresa Mays Brexit bill. To invokeoose one article 50 of the lisbon treaty, which would begin the exit process. Israels high court has recognized ties that the a because a study that could recognize rights. Global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. Am Alisa Parenti this is bloomberg. This is just after 5 30 p. M. In new york. Im joined by bloombergs paul allen with a look at the markets. Good morning to you. Paul lets start off in new zealand. Showing signs of positivity off about it,. 1 right now. Nikkei pointing down at the moment. Aussie model, down after a bit day on thursday. Future sporting down just a touch at eight points lower. Keeping and i on the core group at the open. Macquarrie as just a by agreed to buy the Petroleum Trading business. No terms have been given so far but the deal is expected to close this year and it strengthens their hand in commodities as other lenders have been retreating from that sector. Quite a bit of earnings out today to shanghai electric, csc, keep and i on when the stocks start trading in asia. I am paul allen in sydney. More from Bloomberg Technology next. Caroline this is Bloomberg Technology. I am caroline hyde. Back to a story weve been following, president Donald Trumps second travel ban was blocked by two u. S. Judges hours before it was set to go into effect. Tech Companies Continue to challenge his immigration reforms. The tech in history has been concerned with trumps plan to slow h1b visas, the visas that Tech Companies use to fill high skilled positions they say cannot be filled by u. S. Workers. Any report out by the National Bureau of Economic Research says the visa program tends to hurt the tech workforce. Joining us is one of the authors of this report, etc. They follow for a center at the a fellow at the center for global assistance at the university of californiasan diego. Your study seems to show that h1b actually limited comes oppressed wage growth and u. S. Workers getting into the tech area. Right, caroline, we do find that wages would have been higher for u. S. Born computer scientists, for the main message we have in our report is that on the whole, the u. S. Economy is better off with immigration. The average u. S. Worker is better off and also every worker er than europe born u. S. Born computer scientists are better off to even those in the tech sector. Because we have more computer scientists we need to hire more managers in these jobs and that raises the demand for managers and places that raises their wages and usborn computer scientists switch over to managerial positions. That is why you find there are fewer u. S. Born computer scientists working in Computer Science occupations and at the same time, because of high skilled immigration, there has been some distraction in which growth for these usborn computer scientists. Caroline overall it is a net positive from the gdb perspective because also it helps reduce the overall cost of some of the technology they are helping to perpetuate and reduce the cost for consumers and indeed drive more corporate profits. Gaurav right. Like i said, all workers are better off, but the bulk of the benefits are going to consumers like you and me. We are using Better Software, more efficient apps because of this increase in i. T. Production. Profits for i. T. Firms are higher and it induces new i. T. Firms to enter the industry and that mayewer products have been produced elsewhere in the world but now u. S. Firms are producing them. And sorry. Also inspires and induces, perhaps, those Technology Companies to keep on backing h1b visas. Do you believe that perhaps reform could be necessary to the h1b visa . Do you think that could be a hindrance or a health with the tech sector adding gdp gaurav that is a question for the policy maker i can tell you what the academic facts are. The academic facts are how this kind of innovation in the i. T. Sector driven by computer scientists coming into the country has actually improved u. S. Gdp as well. Like i said, this software is not just used by you and me but also by other sectors in the economy. The Financial Sector uses Better Software, bloomberg tv uses Better Software because of, basically, innovation that is driven by computer scientists, some of which are actually immigrants. Caroline of course, this is globalization at work. This is market efficiency, so to speak, being able to bring labor what areheaper cost you worried potentially that the numbers you come up with, the fact that wages have been 5 , the fact that u. S. Workers within the i. T. 10 less than they would be do you think it gets grabbed as the headline that the h1b is not a net positive . , thev well, i mean, yes discussion about immigration has become rather politicized. We are unbiased academics and we do our research and we put the numbers out there and we find that on the whole, the u. S. Economy is better off but it is not a winwin situation. There is a certain slice of workers come those concentrated in Computer Science occupations, those usborn computer scientists actually have lower wages because of immigration. But also everyone else in the economy is better off and on the whole, the benefits are outweighing the costs. Caroline is there any area in terms of the key growth that you have seen particularly helped by h1b visas, and indeed, any areas that have been hindered by them in particular . Do you see any parts of the economy or technology, the innovation drive, that is particularly won out through immigration . Gaurav that is a little harder to pin down. These immigrants like i said, most h1b visas go to computer scientists and most of these computer scientists are centered in the i. T. Sector. But you have scientists in other sectors as well. All the software we use disseminates emanates to all sectors of the economy, including, say, the Financial Sector, for instance, automobile production, or any kind of sector that uses software. Re has been other research not by me, but other researchers has been thew i. T. Major driver of gdp growth in the last 15 years. And some of this should be attributable to innovation due to immigrant computer scientists as well. Caroline im sure that argument will be made fiercely by the Tech Community in terms of innovation and the growth to gdp. Fellow at the center for global development, thank you very much indeed. Coming up, one medical tech startup is in operating Machine Learning. How Artificial Intelligence can change health care. That is next. And a feature we would like to bring to your attention is our interactive tv function. You will not only be able to watch us live but also see previous interviews and dive into any of the functions we talk about. You can be part of the conversation by sending us instant messages during our shows. This is for bloomberg subscribers only, im afraid. This is bloomberg. Caroline bmw is on track to deliver a fully self driving car by 2021. The german carmaker says it will offer three level four level five capabilities. At level five vehicles are capable of never getting roads without driver input. It is ambitious, but it does have a foothold in this space after announcing a partnership with intel last july. As trump tries to roll back parts of the Affordable Care act, a tech company that makes Health Devices is Going Forward with incorporating Artificial Intelligence into its electrocardiogram. It would allow users to send ecg readings are likely to physicians in realtime and even send notifications when the test does not match previous ecg. The Company Announced a 30 million infusion from mayo clinic. Joined theurse ceo company in 2015. You sleep he worked for bloomberg. Previously he worked for bloomberg. Caroline our new product allows a position to monitor all of the patients who are using it and not only allows them to see the ecg cardiogramelectro staff vic thats right, but it allows doctors to see hypertension, Blood Pressure, the patient activity, and their weight. Doctors for the first time have a complete picture of the taken at hometh and they can see what is happening in between visits. Caroline do you think the Health Care Area is looking towards data and technology with open minds, open heart, willingness to learn, or is it reticent . Vic i think there is an appropriate amount of skepticism. Today are overwhelmed with information. They spend too much time in front of the computer screen already. Going to bely are skeptical until they have proof that the data they are seeing is useful, that in some way helps them adjust medication for the patient. Otherwise this stuff becomes noise and we are kind of thrill that the early reaction we are , because wedoctors think we have done the right amount of work from the regulatory standpoint and also the software, so that we dont overwhelm the doctor with noise, but really service the doctor the appropriate information they can act on. Caroline talk to me about the Geographical Presence of your product. The United Kingdom has been adopting this, my own hometown. Vic we have been thrilled with the reaction in the u. K. , particularly the nhs, which has made for the first time at product reimbursable. Caroline National Health service in the u k is the number one employer, a huge presence. Vic number one employer, largest and oldest Privatized Health insurer in the world. They are really setting the pace. We are seeing in the United States even commercial insurers follow the lead of nhs and also look at these devices because they see the value. If you can spend a small amount of money and catch someone who has atrial fibrillation, that is a lot better than that person having a stroke, which is the most costly and longterm disability in the United States. You canall investment, find a person and get them appropriately medicated and prevent a much worse outcome. Theline talk to me about investment you have been making in your own business, the software you are building on. You are looking towards Machine Learning as well. Vic we think Machine Learning is going to play a profound role in medicine. We think doctors are going to use ai as a tool. We cant imagine half a decade will notwhen doctors be using this tool, just as you would not go outside at night without a flashlight. A flashlight extends human vision. These ai techniques, particularly the kinds we are using, allow a doctor to see more, beyond what the human eyes could see in the electro cardiogram. The ecg has been out for 100 years, but the work we are doing is discovering new signals that have been hidden in the human ecg that the machines can see and human doctors may not be able to. Caroline you announced 30 million coming into the business. Congratulations. Where does that go . Does it go into honing your product or pushing it worldwide . Vic the 30 Million Investment we Just Announced with a world leader in Blood Pressure technology and also mayo clinic, having mayo clinic invest in the company we think is a Pretty Amazing statement as to where we are. We are going to use that to continue Engineering Work that we have been doing. We have been doing some amazing work around deep learning. We will continue to invest in that space. It is our goal as a company to be the leader when it comes to deep learning and ecg. About thei wonder regular freight risks and the regulatory risks and the adoption of the hoops you have jumped through could be surmounted. How much does Political Risk play into your business, because at the moment we are seeing changes made to the Affordable Health care act. Does that affect the way the business goes . Vic absolutely. It certainly affects where the business goes as the Broader Health care picture emerges, which is very turbulent. We dont know where that is going to go. But at the smaller scale, because the device is so inexpensive, the United States in particular, consumers will spend the money they will go to the website and just invited. Just by it. That aspect is largely not affected by these Bigger Health care concerns. Consumers are willing to make a small investment if it means they can take care of their own heart. Caroline there is almost pressure from the consumer going to doctors saying, ive got this, i bought it, and now i am going to use it. Vic we hear stories like that all the time. This is a revolution in health care. Instead of a very large, expensive ecg machines where you might get it taken once or twice a year may be and if that involves you going to the clinic and taking off your shirt and leads a clinician attach and spend 30 minutes and expensive, versus having a small device you carry and you can do it every day, that is the future of medicine, including lowering the cost of medicine. Caroline that was global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. Caroline that was vic gundotra. Mcdonalds acknowledged a Security Breach but not before a oute tweet was sent criticizing President Donald Trump and calling for president obamas return. The company says it is investigating. Friday on Bloomberg Television, Doug Elmendorf joins bloomberg to give hisericas reaction to President Trumps budget. We see a Company Growing from a seed. That is next. This is bloomberg. Galaxye samsungs new s8 will use facial Recognition Technology for mobile payments, according to people familiar with the matter. On thepany is working technology in the coming months and the device will be unveiled later this month with a lot on the line. The phone before that cost the company billions of dollars. Ginkgo fireworks is at the forefront of bringing biology to check this startup is Building Tools for a future where doctors are powered by biology, nontraditional manufacturing it. It is developing flavors and fragrances by modifying microbes. Scenesa behind the look at the company. Phds froma team of m. I. T. Started the company just a few miles away from their alma mater. Inside they are Building Tools for a future where factors stop manufacturing goods and start growing them. At the heart of biology is digital code in the form of dna. We have the ability to read that go through dna sequencing and write it with dna synthesis, and if you can read and write code, you can program. Can you program biology to make stuff . Yes, because dna is code. They can grow their own iphones, they are focusing on something similar, reprogramming microbes for yeast. It is refining the process in this robotfilled lab. This is our Second Generation lab. If you zoom in, it looks sick of regular lab, but if you zoom out, it is all robotics. We are trying to make this move faster. Ellen by now, ginkgo is using genetically modified east to create a perfume for the fragrance industry. The researchers studied the part of the peachs genetic code that carries the desired scent. They compare it with a used dna and modify it to make a similar smelling substance. It is a lot like growing beer. It produces the peach sent as a byproduct. Differentese is a gene combination that is going to make a slightly different smell. Lets see what weve got. Well, it smells a little vinegary kind of a fruity smell. Samples that pass the smell test are destined to be inside perfume bottles and the like. But once you really start thinking about it, you can see this Technology Applied to pretty unexpected places. What if this was a microsecond live directly on your skin . And so on your skin you are producing your perfume. E is producing this on its own. A lot of the smells you associate with human bodies are coming from microbes. Managing those microbes might be a little bit different and make them a little bit different isnt that hard to believe. Ellen things are looking good these days for ginkgo. Dna recently bought a splicing company in raise 100 million from investors. It is too soon to say if they rule ever make a quantum leap to perfume to grow your own electronics, but they seem this modified east as the First Step Towards a factory where biology can make a most anything. In the future we could use biology to make a semiconductor chip. If you look into biology, its ability to place atoms is superior to intel today. If you just knew how to program it, you could do that. The applications for this are sort of endless. Caroline fascinating. That was Bloomberg Technology s ellen huet reporting from boston there. That does it for this edition of Bloomberg Technology. Tomorrow, catch our conversation with the article ceo oracle ceo, right here on Bloomberg Television and radio. And remember, all episodes of Bloomberg Technology are Live Streaming on twitter. Check us out weekdays, 5 00 p. M. In new york, 2 00 p. M. In san francisco. That is all for now. This is bloomberg. The country is transforming its approach to human resources. In episode one, we examine the ways Japanese Companies are supporting womens careers. And enabling their advancement towards breaking the glass ceiling. [music] studios in new york city, this is charlie rose. Good evening. Im jeff greenfield, filling in for charlie rose. Not exactly the consensus choice of the republican party, roughly one in senators refused to endorse him. So did four of the last five republican president ial nominees. But with his election and with the Party Controlling both houses of congress, republicans almost all of almost all stripes saw a chance to finally their mostof significant goals, from tax cuts to the environment to regulation. First big test, repealing and replacing obamacare, has