First Lady Michelle obama. The current first lady, melania trump, garnered 1 of the vote. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Cory this is Bloomberg Technology. Successp, big tech, big in 2017. The headwinds in the coming year. We will discuss. Among the top cryptocurrencies of the year, it is breaking out from bitcoin. The ceo, brad garlinghouse. A look back at tech leaders who helped shape 2017. Satya nadella, Sheryl Sandberg, and first, our lede. Bigcap tech holding on historic gains thanks to record profits, a solid user base, and promising user growth. Big gains for the biggest names in technology, but a big tech reckoning could come in 2018. Here to wrap this up, a man who casts his own shadow, james cakmak. Good to see you, as always. Its interesting. I love the way you have covered these companies. You are at a lot of these very big companies, but with a skeptical eye. Some of the tough issues we have seen them show. When you look at them, who has the toughest haul in the coming year . James its been an interesting year because all these companies have posted tremendous financial successes and have definitely grown much bigger than i think many thought at the beginning of the year in their own right. At the same time, we saw all this regularly scrutiny regulatory scrutiny across all the companies. The election didnt help with that scrutiny. As we look to 2018 i think you can handicap, it as amazon is likely in the drivers seat when it comes to favorable tailwinds, winds when it comes to regulatory environment. As you move down that list within the same group, i think google is next. They used to be the politically savviest. Then you have facebook. Going to get worse as we approach the midterm elections later in 2018. I think that scrutiny will only escalate from here, at least from a headline perspective. Twitter, facebook, youtube, part of google do you think that hurts Financial Results . Over the weekend, facebook introduced a feature that lets you find out if you have retweeted or favorited or repo sted something from a russian fake news site. It was done very quietly over the holiday weekend. James financially speaking, its full steam ahead for all of these companies. Amazon continuing to gain share versus traditional retail. Facebook continuing to gain share versus traditional media outlets. Google, the same story. Twitter, they are trying to carve out a path of their own, going more niche. These companies will continue to grow. Cory so what youre saying is, a lot of headlines, who cares . Its not going to affect their Financial Results. James its not going to affect their Financial Results, but you do have to think about, from a stock perspective, the degree of multiple expansion. We have the earnings power, but at the same time valuations have been steadily rising for all of these companies. They are still relatively attractive for valuation relative to their growth rate. But i do think that is something that investors will definitely need to consider. Cory so, do a separate investment results from some of those other companies do we separate investment results from some of those other companies . There is no company that they used to say when mike wallace would knock on the door, dont answer, because 60 minutes is outside, trying to bust you for something. Amazon scares every business. Will regulatory concerns concern amazon, not least of which because this president does not like the washington post, which is owned by jeff bezos . James you have amazon moving closer to all the federal agencies with aws. You have them shopping around their Second Headquarters where, all these cities are clamoring for the attention to get that. Cory which means they will tick off every singleoff every singly didnt choose. It will make political problems. James at the same time, you have all these new Fulfillment Centers that will open up. Amazon is safe for now, i think. But once you trigger some major headlines, such as reaching 1 trillion in value, i think that will reopen the floodgates for regulators to come in. Right now i think regulators, are more focused on things that could potentially affect the election. Was actually an issue, the ftc would have scrutinized the whole Foods Acquisition a lot more than just a one sentence response, which we think was cory you are putting your faith in government regulators, really, james . James im just saying that there are priorities and there are incentives. What are the regulators incentivized to do . They are incentivized to attack the things that can affect their political prospects. Cory i will give you that. I was just giving you a hard time. James the bigger story for 20 is all these companies have been growing in their own right, but in 2018 you will see them start to encroach onto each others territory. The google versus amazon battle is brewing. The google versus facebook battle is brewing. Those battles will continue to escalate. It will be a question of not if these companies will get bigger, but will there be a zerosum type of aspect. I think that will be interesting. It is curious. With the duopoly in advertising between facebook and google, you echo anddevices like you see amazon getting into search in its own way. Ames you are eliminating the incentive to search on it is cue explicitly when you can introduce a discovery mechanism on amazon. When you look at google, the product listing ads have been the bread and butter for the company in recent years. As you shift that away, and then you look at the content side of the equation, where they amazon is likely going to be the biggest content spender in the industry, potentially even eclipsing netflix. What are the implications there for you to . Youtube . Cory always a pleasure, james cakmak. There is one headline for 2017 fake news. Bloombergs sarah frier takes a look at the hits and what social Media Companies are doing to curb their spread. Sarah 2017 is the year we realized how quick and easy spreading misinformation on social media is and how profitable the spread of fake news can be. For the u. S. President ial election, fake news we learned it is also a tool to disrupt democracy. It reached over 150 million americans on facebook with inflammatory postings, starting conflict over issues like race and religion. This was done with 80,000 posts boosted by 100,000 in ad spending. These ads are just the tip of a very large iceberg. Sarah and it resulted in google, facebook, and twitter all testifying in hours of congressional hearings about russias tactics and how they can try to stop them. But its not limited to the u. S. The spread of fake news became a global issue in 2017. France and germany successfully fighting the scorch in their own scourge in the their own elections. A genocide in myanmar and an attack in the philippines on a local News Organization just what can big tex do to rain this big tech do to rein this in . Facebook hires thousands of people to sift through that content. Critics worry about social Media Companies going too far with their censorship. Twitter said they shut down thousands of accounts that are taking steps and they are taking steps to get tougher on extremists while investigating further. One thing is for sure fake news is going to get harder to stop. Facebook often argues that it is a technology company, not a Media Company. Well, to take on fake news in 2018, it may have to be both. Cory that was bloombergs sarah frier. Coming up, our exclusive nadella,ion with satya on the dangers of ai, the importance of windows to microsofts future. Bloomberg technology is Live Streaming on twitter. Go to technology. This is bloomberg. Check this out. New york city is thinking about adding an extra fee on every single override in manhattan every single uber ride in manhattan. There are 68,000 cars affiliated with Ridesharing Services in new york city streets. Cities like chicago, seattle, portland have implemented their own ridesharing fees to encourage public transportation. We bring you the highlights from the best interviews of 2017. Chang sat down with nadella. Satya to us, one of the key things, i guess there is some truth to it. We will always invest in hardware to create new categories. Emily would you ever make a phone again, and under what conditions . Satya at this point, what is needed is for us to not be obsessed about categories that are well served. Not at least on current rules. What is considered a phone today will be a very different will be very different in the future. Is it a mobile device . Yes, it is. It is untethered. It is batterypowered. You wear it on your eyes. What is the future of those kinds of devices. To me, microsoft will always be in the end to end computer experiencing business, but our goal is to invent categories and reinvent categories. Emily you talk about three egg strategic bets three big strategic bets, mixed reality, ai, and quantum computing. On the issue of ai, are you at all concerned that facebook, google, microsoft google, apple could outpace microsoft on ai . Satya to me, what is microsofts approach will be all around how do we take ai. Any power trick of hours. Ours. The most important thing to us thate we democratizing so every customer of ours can build their own ai . We better figure out a way to democratize it so that every company, whether its a small nonprofit or a large multinational can use ai in the context of their endeavor. Thats kind of what we want to do. Emily is elon musk writes to be warning about the dangers right to be warning about the dangers of ai, whether it be military applications or otherwise . Satya like any new technology, there are a lot of good things that come with it and we should grab hold of it, but be clear i aboutany be cleareyed any unintended consequences. Wherever ai runs amok or we lose control, that could be dangerous. So, i think the First Response responsibility we have instead of thinking thats going to happen, let us enshrine a set of design principles. I think that we shouldnt abdicate our responsibility, like good user experience, there is such a thing called good ai. Im a Firm Believer that what is the need of the hour is to enshrine those principles. Emily so it could take over the world, but hopefully not . Satya its up to us. Emily what is one technology that the competition got to first that microsoft would have wished to invent . Satya i wish we had gotten to the relational database before oracle. One of the most amazing pieces echnology, or before ibm i just dont worry as much about looking at the product or the technology somebody else got to it. The question is, are we able to go back to that sense of purpose that we have, what we can do with the technology, something that fits with our identity. Even if somebody else gets to a quantum computer first, what are they going to do with it versus what we are going to do with it will be very different. Emily you build several of your products for several different operating systems. Whats the future importance of windows to the microsoft future in general . Satya there are one billion users of windows. It continues to be a very do,ificant part of what we but its not the only part. I think thats the change for us. We now have a much more diverse, robust business. We have xbox in gaming, which spans both pc gaming and console gaming. We have 55 million xbox live subscribers. We have the windows business. We have 365 office 365. We have azure. Microsoft, in that sense, is a much more diversified portfolio. Linkages languages between them. Thats how i think we are going to keep going forward. Cory that was microsoft ceo such a novella satya nadella. A valuation of 1. 2 billion without revenue. How can that be possible . Blockchain. A reminder of our interactive tv function. Find tv. Send the producers a message, even while the show is going on. They along with the charts we bring you on air. This is for bloomberg subscribers only. This is bloomberg. Freakish surge in the last few months of the year saw a lot of companies trying to cash in on the crypto craze. It includes a hong kong startup. Stock has seen massive gains, up more than 1000 for the year. I wrote about investor interest in the company for bloomberg. Talk about this story with a Bloomberg News reporter, who is up on all these things. Its really interesting to me that this isnt just about speculation on currencies and stores of value. We have stocks and companies renaming themselves, announcing new business plans, like this one i wrote about, that used to be called j. A. Energy, that was Something Like a planttoenergy business, reverse merger, then it becomes a blockchain company. There is a juice maker who puts blockchain in its name, a sports bra maker cory sports bras and blockchain . Who would have thought blockchain could help the manufacturing process for sports bras. The thing is, none of them are doing anything and blockchain is just added to the name. Its like the late19 90s and early2000s when companies were adding dotcom to their name, not really doing anything with the internet, but their stocks would surge. It is deja vu all over again. Cory when i was a money manager and looking for stocks i didnt believe in, i would look for things that were in line with the trend. A social Media Company that didnt have a social network, a Wireless Company that didnt have a wireless product. When i saw this, that it has both internet of things and blockchain in its description, and has zero revenue and over 1 billion in valuation, i thought this one is worth kicking around a little bit. Julie not even know revenues, it has 15,000 of cash on hand. They are burning through 220,000 per month. It doesnt seem like a company that was one that should be soaring in valuation. I think there is a quote in your story from a professor saying the profile of the company is scary, and that basically is the summation of what this whole thing is. Cory the professor, charles lee, at Stanford Business school, has written very positively about chinese reverse mortgages. Even then, he finds this one concerning. I looked back at the progeny, who was behind this deal. They only list we talked to executives, and three of the people at the company, one, a former director, two a former two former engineers their product was called the urine stopper. Their expertise was in stopping bedwetting. Julie you manage to get to geting you managed bedwetting in the headline at bloomberg. Cory its my finest achievement. I talked to one of the lawyers for the company. If these guys have expertise in bedwetting, how can they have a Company Based on blockchain . Hadbedwetting products radioactive protons nothing turned out to be true. Whats the connection between bedwetting and bitcoin . Well, no one has expensive bitcoin. Thats the greatest thing about it. Has experience in bitcoin. Thats the greatest thing about it. Julie blockchain has been around for a while, so i might take a little bit of an argument with it at that point. If you do have experience, you would want to have that on your resume. It sounds like they werent easy to get in contact with when you were writing this story. Cory yeah. One of the main phone number the main phone number listed in the most recent filing didnt have the full phone number. The previous one was disconnected. Its an Interesting Company with a billiondollar market cap. Today. Lit threetoone julie, thank you very much. We appreciate your time. Up next, we continue the cryptocurrency conversation. The ceo of ripple is actually using blockchain to field a banking. This is bloomberg. You are watching Bloomberg Technology. Lets start with a check of your first word news. Former president obama gave his first interview since leaving the white house. He warned about the use of social media by world leaders. President obama all of us in leadership have to find ways in which we can recreate a common space on the internet. One of the dangers of the internet is people can have entirely different realities. They can be cocooned in the information that reinforces their current biases. Mr. Obama did not mention President Trump by name. The irs says 2018 property taxes can be deductible if they are assessed and paid in 2017. Residents in high tax states have been rushing to prepay next years property taxes before new rules from President Trumps tax plan overhaul kick in. At least 10 people wounded after an explosion at a supermarket in russia. An explosive device went off in a storage area of the store in st. Petersburg. No one has yet claimed responsibility for the blast. In russia, plant president Vladimir Putin has submitted the nomination papers required for him to run for reelection as an independent. He is seeking his fourth president ial term. He has a current Approval Rating of about 80 heading toward the march election. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Its just after 5 30 p. M. Here in new york. Its 6 30 thursday morning in hong kong. Im joined by bloombergs david ingles. David good morning. As we get underway this thursday, just a few things to notice. A lot of data coming out over the next hour. For japantput numbers and south korea. We are essentially looking at a flat to lower start. The nikkei 225 may be about 0. 1 lower at the open. New zealand, uninspired at the open, flat as well. Have a look at yields. The story that we will be following is whether or not we get another leg up. At the moment, their early on, we are not seeing that across some of these bond markets that are up and running in the asiapacific. One other thing to note, two trading days left in the asiapacific. We are about 1 3 of 1 short of the record high. Do we get there . It has not been a stellar year for equities. Im david ingles in hong kong. More from Bloomberg Technology next. Cory welcome to Bloomberg Technology. Im cory j