Speech at Georgetown University on thursday. And the huawei perspective. On 5g, securities concerns and more. But first, our top story. Percent six and a half 6. 5 . S comes after posting the consecutive quarters for slower sales. Line start with the top where there is not enough growth for red hot red hat to offset the cost. This is one word expectations. If you look at ibms core business, they are managing it for profitability as if they can. As people build the hyper cloud infrastructures, there needs in the Core Technology space, those change. They will need to drive efficiency in that area and automate where they can, Deploy Technology that allows them to , so less costs in that area they can stabilize that part of business. To say stabilized is no overstatement. Business was not able to grow in revenue terms. When do you need to see it filtered through to the bottom line . You look closely, we are starting to see it now. What that means is you have a red hat product that is put through this vast ibms sheen look at the move to theylouds, we saw have a best fit Cloud Strategy and some in the [inaudible] to do is enable the high cloud customers out there and eccentric growth. We are starting to see that. I want to take a look at the chart here for our customers, which you show the story. Two hasbetween the really expanded. Valueftware look over given the front of what i will tell you is the expectations are really high. We have seen software continue to celery and believe Revenue Growth for the overall industry between 8 and 10 annual growth and that is really steady and predictable. What is changing that i think isple are sent to understand it is incredibly becoming incredibly predictable. We are at the nascent innings for that. That means predictable revenue and you can see the Management Team very far in terms of what revenue is going to be in terms of those subscriptions. Does that mean you are focused on the top line or is it altering on the bottom question mark depending bottom . You are also always focused on the bottom line. What you are focused on is ,ookings, not even revenue being able to sign new contracts that you know will be a suspicion revenue that they will earn over the couple year peri od. We have seen some good public market. Stories in the why do you think those are good stories despite the high valuation . What they do is go back to the 2000 timeframe and say it is a bubble, it is crazy. I would argue is that these companies are solving really hard problems whether they are around elaboration, application , thent and loud cloud or incident management. When technology moved to the cloud, nobody thought there would be no need for the software products. That a lot of the same problems exist in the cloud. I have to be able to make my data and figure out do i have the right application for the right workload . How do i respond where the . When im in the cloud, my entire business will go down if the Cloud Application go down, so the problems are there. What i believe is over time, you will see the companies create value. You believe they are unfounded . I believe they will create meaningful value Going Forward and it depends on where you are in the cycle, but these companies are creating value in the longterm. Looking at the u. S. China trade war, we have not really gotten a firm find. How does that play out in the market . In the, we saw a relatively small impact in 2018. Going to 2019, we saw tariffs crash in terms of how it is constructed in the things on the i orist list tarr tariff list get pushed out. [indiscernible] 3 would take us down to overall growth. However, i think the likely scenario, the tariff deadline gets pushed down further. Thank you. Incomeis trying to boost from the popular venmo persontoperson payment at app. Up, one of the companies that helped power sales worked with data dogs in and more. If you like bloomberg news, check us out on the radio. You contact us out on the , Bloomberg Radio and sirius xm. This is bloomberg. Juul is suspending the sale of most of its ecigarette flavors in the u. S. They took action after a review, led by its new ceo. The devices that they generation of teens and young adults. Dog, companies that went public in 2019. Toy use ai powered software drive revenue operations. Announced querrey and ,60 million in series d funding bringing the total to over 100 million. Joining us out, a partner at bain capital. Congratulations on the funding. What you using the proceeds for . We are super excited for the fun race. It is too great firms. In terms of what we are using the funds for, we will be investing in sales to drive topline growth and also r d because our customers are looking for us to expand our value. Much focus on driving topline Revenue Growth, there is certainly on it you can see past profitability with querrey and some of the other companies. How important is it . Hashis is a company that such a big Market Opportunity ahead because every Business Needs to generate revenue and so in the shortterm, our focus is how do we generate Revenue Growth for querrey . We talk a lot about companies coming on this program. Theyre coming out with the latest technology. It is really crowded space. How do you stand out . As i think about the countries like zoom, what is interesting is these great companies, they are looking at the application of ai across the entire revenue process and how can we use that to help them accelerate their revenue and boost the accuracy of their forecast . To remarkableg growth and shareholder value. What happens is our platform is under pending all of this. Talked about how volatile of the market it has been as of late. What is working now . Companies need to move to a recurring revenue model. You the ability to have lots of visibility in the future and investors are always looking at what generates cash flow. From day one, we have been working with andy now for six years since the beginning and hes always had a vision on what is the right business model. You are focused on running the business and daytoday operations, what is the appropriate, not exit strategy, but some of you, your end of line goal . I think we are really focused on growing the value within the customer base. I have customers who are spending one of the thousand dollars now spending 1 million. In medical device manufacturer was mentioning that we produce of running and we are focused on spending around r d and making sure we can help our customers optimize evident every revenue moment. Is your ideal exit strategy . We are always investing to build companies that matter. They are solving a problem that matters to every business. Theou also talk about differences been direct and ipo. Do you expect more direct listings take more market share within that ipo market . You really want the market to decide what is the best pricing for the ipo and so my expectation is over the next couple of years, youll start to see more direct. It is not for everybody, high quality link names with great Brand Awareness since. For other companies, they may need to raise their profile stop profile. Been the extra focus, the extra attention, not only on profitability, but valuation . I think in our market we look at the folks that have been. Round these are all government regulations being applied, so our customers have confidence and not be worried about privacy or security and that has accelerated the adoption of our revenue platform across a myriad of injuries industries. Thank you. Been a target of the Trump Administration criticism, most recently as the company pushes for five g technology in the u. S. An interview of the chief officer next. Be sure to follow our global breaking news network on tictoc on twitter. Todays get a check of top tech talks. To 207, slightly better demand for the iphone 11. Following that upgrade, apple supplier cirrus logic was upgraded from they will benefit from releasing the 5g version of the iphone next year. Shares the Company Reported earnings that beat expectations. Results suggest a growth inflection is underway. Those were todays top tech calls. The Trump Administration has made no secret of its hostility ,o huawei, moving into 5g placing restrictions on sales and equipment into the u. S. And sales by u. S. Companies. Bloombergs david westin sat down with the chief Technology Officer of the huawei carrier business group. It would be lovely to have a discussion with the Current Administration here in the u. S. And understand the rules. Or would you like to explain our company and do business together . How would you like to explain our company and do our business together . Will not do anything against the law. We comply with the law and every country. There is no way we will comply with what cannot be done in china. If we have constructive discussion with the u. S. , explain why we do things and how we do things, there is nothing. Ecret about huawei we dont do anything that is secret or different. R d becauseavily in we understand 30 years ago that if you dont have your own products, you are just a reseller. For u. S. Earned companies to take a snapshot of our product and put it into u. S. Companies. We have done it before, motorola , it is not something new for the serious. If you tell us what the role is, then maybe we can understand how to play. Let me just raise the possibility that the problem that the administration has is not with huawei come out saying they are a bad company and certainly not with the success of huawei, if anything you are so successful he set a larger market share. The concern is with beijing. You cannot control what they do and i think that is the concern. Doesnt that make your position more difficult . I dont agree. I have been in the company 11 years and dont agree. , every time i quite clear, lets talk about market share and competition. You cannot have too much market share. If you take too much, there will be no competition, there is no innovation. Could you imagine if everything was well connected, all the advances we would be able to make . We would be able to ask things like cancer, different types of diseases. He has always said you cannot take too much market share and you must provide a healthy ecosystem. 11er, we spent more than billion of components and other stuff. We would continue to do that if the u. S. Would allow us to be part of value part of a Global Supply chain. Risk is the United States to falling behind 5g . We already build a law of 4g weent in rural youth are to build a law of 4g equipment in rural u. S. We can deliver just using 4g about 450 megs per second. The u. S. Moving down the line was necessary because of the constraints in the spectrum, but the good thing is Companies Like tmobile and verizon cop you learn verizon, you start to learn where the Business Opportunities are. At, the u. S. Is good pulling the data and look at what google, microsoft and amazon do. Why not let huawei come in and provide the best technology and Work Together with the Trump Administration . That was david westin. The chief Technology Officer of huawei. Coming up, despite the competition up for netflix, wall street is pretty thrilled with the latest earnings report. This is bloomberg. Taylor this is Bloomberg Technology. Shares of netflix are up the most since january. There would Quarter Results related investors concerns about competition from apple and disney. Stronger growth overseas. To discuss these earnings and preview next week, i am joined by an rbc capital analyst. Talk to us about how netflix is reaching the scurve in terms of growth. I dont want to give michael too much credit, but he may be right. About 2. 5oing to add one million subscribers this year just in the u. S. Last five years, netflix has added about 5 million subscriptions a year, so when growth slows down, it tells you youre are pretty far along the scurve with penetration. Netflix did impose a price increase earlier this year, the biggest they had ever implement it because it took their low in price 7. 99 to 8. 99. I think that if the issue. I think they overstated or over thought or overestimated how much Pricing Power they had. It would take a couple of quarters to work through that. I think there are still plenty of Growth Opportunities overseas. Taelor they did talk about how some of that price increase was pressuring them a little bit in terms of new subscribers. For them to sense adopt a lowprice price model . Dont think they are going to do that, having asked in the question about a dozen times over the last few years. Maybe they will change their mind in the future. Possibly, they could introduce a lower price subscription plan, but i dont think they will do that. They have a lot of confidence in the quantity and quality of content i have is enough to justify the seven dollars 99 cents. I think it is. The base price is one dollar more than disney, but you got a lot more content. I think it is actually justified. Would it help them to go to a lower price point . Probably, but i dont think they will do it. Taylor would it make sense to buy a Hollywood Studio . Would they just buy a studio and be able to get distribution that way . Possibly. I dont thing so. I thought you were going to go the other way and talk about if they would get more into the production side rather than the distribution side. I could see them vertically integrating into production, not so much in the distribution. I think they are pretty happy with home distribution. I think that is kind of where the growth is. This revolution we are living in is not going to be televised. Its going to be streamed. Everybody is going to be streaming disney, apple, time warner, comcast. I think netflix is in the right business. The question is do they keep executing well enough to justify the price points they offer . Taylor who is best positioned to take on a company like netflix . Only disney. I dont think apple is, really, unless they want to put a lot of money into content, which i dont think they do. And they also have to come up with a more compelling service. He cannot just throw money at this and assume you get it right. Netflix has been doing this long time. It does give them a scale advantage. The battle here is in International Markets. Next year, netflix is going to roll out 130 new local language series in International Markets. Im talking the philippines, turkey, nigeria everywhere around the world. Thats where the subgroup is, and i think netflix is way ahead of the curve. Thats their big advantage right now. A lot of problems nearterm, but that is their advantage longterm. Taylor you also cover roku. Is International Growth key to their expansion . Theres two things that are key to roku. What is that is a great play in the streaming wars. They are going to have to advertise because roku already has 30 million streaming subscriptions. Second, if you start usage groups on roku, you will have to share some of that with roku Going Forwards. Of thetionals part growth strategy, but they have barely scratched it, so, yes, if they knock the cover off the ball in International Markets as theyve done in the u. S. , the stock could triple from here. Taylor i wanted to talk about facebook. Theres been a lot of rumors ,his week and talks about libra if the cryptocurrency works or if it doesnt. His facebook doing the right strategy by going out on these other ventures or should they stick to the core business . I dont know. You are asking the right question. The two most popular messaging applications in the world right now generate about zero in revenue for the company. Could they monetize it through advertising . They are pretty good at doing that, so they should probably try that first. Could they create a wallet around it . Yes. Does it have to be a crypto financed wallet . I dont know. The question in my mind was why we have to go libra, but i think its too early to call if that was the right move or not. They think about monetizing it through a wallet, i think it is a good idea. Taylor as uss the earnings landscape, what is your topic . Facebook is the most interesting because i know we just discussed about the libra issue. The rest of the business i think is humming. This company is going to do north of 30 Revenue Growth this year. I know theres a lot of overhangs on it. I know you asked about regulation, but this stock trades at a discount to its growth rate. You rarely see companies trade at a sustainable discount to growth rate. Therewill be an arbitrage , and that multiple is likely to go up. When it does, its hard to know. Sometimes the next 12 to 18 months, i think there is a material berating in the stock. Taylor you are stealing all my good questions. Aat companies are trading at big discount we talk about the conglomerate discount. Lets say there is a regulation discount. You remove that. Would you be poised to see it uptrend . Theres only five Big Tech Companies regulators and politicians are looking for. In the democratic debates, only three were brought up, i think amazon, facebook, and google. Facebook is probably most of the cross hairs and google, too. Both are paying pretty large fines. My guess is amazon will be fine, too, rightly or wrongly my guess is wrongly. All three at some levels have had their multiples taken down by the market over fear of fundamentals. I will make one clear point on this we have had major regulation in the market. These companies have already been regulated. Impacted facebook or googles fundamentals. No change in the Value Proposition of those businesses to advertisers or consumers. If that did not do it, i dont know why new regulation would do it. I really doubt they will be broken up. I think it would be very unfortunate, too, for consumers. I hope they dont get broken up. I think it is unlikely they get broken up, too. In that case, there is this mismatch and you want to buy the strongest assets when they are on sale p or co when they are on sale. Taylor coming, zuckerberg speaks out. Combatingons to online hate speech or just playing back facebooks greatest hits . Thats next. This is bloomberg. Taylor Facebook Ceo Mark Zuckerberg gave a speech on the social networks take on online free speech at Georgetown University. We heard a lot of facebooks already laid out defenses. More people across the spectrum believe that achieving the political outcomes that they think matter is more important than every person having a voice and being heard, and i think that that is dangerous. And i understand the concerns that people have about how tech platforms have centralized power , but i actually believe that a much bigger story is how much these platforms have decentralized power by putting it directly into peoples hands. We have actually found that a different strategy works best, and that is focusing on the authenticity of the speaker rather than trying to judge the content itself. While i certainly worry about an erosion of truth, i dont think most people want to live in a world where you can only post things that Tech Companies judged to be 100 true. Taylor for more, i want to go to bloombergs kurt wegner who was at the event in washington. What are your Key Takeaways . Kurt you heard a few of them there. Have a ceo dealing with for antitrust organizations talking about decentralized power and how his platform is actually good for people. He talked about the power of being able to reach the masses, kind of the power of scale as being the fifth estate, actually, is what he was talking about today. Overall, there were a lot of talking points from facebook that we had heard before, but i think some of the keys were, we are actually doing a good thing by giving people a voice. We are supporting politicians by not pulling down their ads and being worried about the accuracy of political ads. He also kinda brought up this threat of china, which is something he has done before, and he said if we dont do this, china might come in and take over and we dont and they dont have the same beliefs we do and that is a real threat. Taylor before we get to china, i want to hit on the first point you made about facebook wanting not wanting to be in the Fact Checking business. What is their defense . Kurt you kind of heard him talk about it there. He said no one really wants to have a tech company be deciding what should be true and what should be false and what should be allowed on the internet and what should not and this has been the debate around facebook for a long time what is the companys role in dictating what exists online . Part of his argument was that if are facte ones who checking political ads or if we get rid of political ads altogether, which is actually something i wrote about this week i think facebook should consider doing, he said that will benefit the incumbents because suddenly, the people who already have a platform, who already have attention from the media, those are the only people who will get talked about, not the people who are willing to pay to kind of make their way on the scenes. Those are a couple of his arguments for why he thinks not only political ads should stay on facebook but why he thinks they should not be meddling with them. Taylor thanks for joining me. For more on the subject of free speech online, i want to welcome a journalist who has been covering the topic extensively. He has a staff writer at the new yorker and just published antisocial online extremist technoutopias in the hijacking of the conversation. Talk to me about the zuckerberg speech today, not wanting to be in the Fact Checking business. Isnt that right, though . When it went Tech Companies telling us what is or is not news. I think this is a perfect encapsulation of how misleading a lot of these talking points are when it comes from the people who build these systems. He wants to make it seem like this is just a neutral Public Square and that he is just someone who wants to let freedom of expression rain and not be a gatekeeper. Thats fine, but he is a gatekeeper. Facebook makes decisions about how their algorithms work every day. They make decisions about what you see in your feet and what you do not, so its disingenuous to suggest that this thing he built is not already putting a finger on the scale. It reminds me of someone who built a big highway system evidence as we like freedom of enterprise, we like cars, we dont want to deal with the fact that pollution is killing our environment. Sorry, you build the system. It is having consequences. You have to clean it up. If that is the case, why there is an increase in calls for facebook to be treated like a publisher. Yes, something has to be done. Remind me of starting a warehouse party. You start a big party, you hope everyone will have fun and just get along, but if you dont building a Sprinkler System and people start setting things on fire, you do not have any way of policing or controlling things when things get out of control. You cannot just hope and pray that progress keep going and there will be some arc of history that will deliver us to a better result. Facebook has been used to spark genocide in various countries. It has been used to spread autocracy throughout the world. Its nice to rest on the abstractions of free speech, but abstractions are not going to get us far. Taylor we heard from marc benioff this week making calls for facebook to be broken up, but does that actually solve the problem . No, it does not solve the problem. I think the problem is deeper than that. Antisocialalled not just because it is antisocial media, but there was this feeling all of the internet would be prosocial and bring us together. That was the first 10 years. An antisocialys side. There were always people inciting violence. There was always harassment. There was always bigotry. We just did not want to think about that. We wanted to think about the arab spring and democracy and all the fun stuff about the internet, but if we dont look at the harm that can be caused, we are just kidding ourselves. We are just leaving out half the story. Taylor you brought up the book. You were on the road conducting dozens of interviews. What were some of the biggest things you learn . In addition to interviews, i was just a fly on the wall as misogynists, as their masks would flick. I was with a guy in california who was just an average married guy in his 40s, not some teenage troll and his mothers basement. Married guy with kids and a dog. He would wake up in the morning and say i want to create a subliminal association between a political candidate i dont like and disease and discussed and even though he did not have evidence to do that, he would just do it. I would watch him just open periscope, rally a bunch of his followers, get a periscope , get that trending on twitter, and from there, it would just enter the National Discourse to the point i would wake up the next morning and read the newspaper and this guys fingerprints would be all over the news and trust me, this is not a guy we want with our fingerprints all over the national news. Taylor not only did you write a book, but you had an oped recently which said one thing they could do is replace Sheryl Sandberg with a human rights lawyer or someone who can see violence. Can lead to why Sheryl Sandberg . From all we heard, she seems to be the person most promoting profit at all cost and the company. Most of the reporting that has come out of there has as she was the one who set up the advertising model. Shes the one who has been really uncompromising about. Ahead with anything that gets in the way a prophet soda being eliminated and some things that get in the way of profit are just necessary for our survival, like making sure that these platforms dont spark genocide, making sure they dont spark violence, making sure people thet get killed because of violence. Taylor in their defense, they wanted to create a platform in which there was public discourse, room for us to have these conversations and discussions. Why is it then their burden to be able to regulate what is or is not set . Because they built the room in which we are having this party. If youre hosting a party and dont card people before they come in and do not decide any behaviors out of bounds for the first 10 years and things start going haywire, it is your party. You might not be doing everything that everyone is doing, but you are the host. You are responsible for what happens in that room. Taylor what regulation is the right answer . Not all regulation is good. Like you said, breaking up these companies would not necessarily solve the underlying problem. I dont think the government can do it on its own. I think some government things can be useful, analogous to antitrust stuff, but i think a lot of it will have to happen from the companies themselves and from us, the users, to really create a Public Movement to push back and say there are boundaries. Any industry, we can talk about freedom of speech. We can talk about freedom of enterprise, but if you are trying to get kids addicted to cigarettes or trying to get people addicted to gambling, we have as a society is decided there are limits. During the democratic debate, and a lot of senators said we should delete trumps twitter account. Twitter came out and said World Leaders are above their policies. What is the case being made that some accounts should or should not be made . The case to delete president trumps twitter account is pretty easy he violates the terms of agreement. When you threaten nuclear war, that is a threat. Taylor thank you so much for joining me. Still ahead, competition between flack and microsoft heats up. This is bloomberg. Taylor it has been a busy few months for slack. The Company Announced a launch of workflow builder, and newproduct to help users cut the work out of work. This comes just a few months after direct listing on the new york stock exchange. Since then, competition has been heating up with microsoft. To discuss all of this, i bring and brian elliott, slacks vp of platforms. Talk about workflow builder. Slack built workflow builder to make peoples work more simple, more productive. Its a visual tool that allows any user to automate routine tasks. Everybody has the joy of introducing somebody new to their team. You need to get them to talk to the right people, share the right documents, pull out the right forms. , one of our customers, build a workflow that automates the process, takes the work of work out of it, helps people focus on their every day job. That is what we are with what we are really about more broadly. We bring alignments and productivity to teams. Taylor you came out with a blog post last week that highlighted daily active users. Competition been . Competition is based on the value slack brings to its customers. Microsoft itself is a highly successful company. They have done a great job spitting out the office 365 franchise. It has 100 million users. Theyre also pushing people into teams. 13 million is a good number, but im not sure it is a big success in that context. Slack, people pay for it because they see the value in it. 12 million daily active users. People have slack open on their desktop or on their phone for nine hours a day. They are using it for 90 minutes of that. 5 billion actions a week. 5 billion actions a week taken by people means people are reading messages, writing messages, doing searches, sharing documents, and i run the Platform Team which integrates the tools people use. 5 billion actions means people are integrating and using the tools they need every day in slack. That is why we are seeing real value and thats why Companies Pay for it. Taylor i think the big Success Story has been those Enterprise Customers. Those are pulling in more than 100,000 in revenue. You want more of those big clients. How does workflow builder get us to get more of those types of clients . Integrate example of how we help companies deliver on what theyve asked us for. Large Enterprise Customers are the ones that asked me to help get the workflow builder built. Let me give you an example there are 500,000 custom applications that get used in slack every week. These are internal jobs somebody has built. That might be the purchase order improvement process. Up until workflow builder, you had to have a developer to build one of those. Workflow builder allows anyone in a company to automate those kind of routine jobs. Every large Enterprise Customer is short on developers. Workflow builder addresses a real need to help companies collaborate more efficiently and more productively, including really large enterprises. Taylor i know you are running the platform side of the business. We have talked about the differences between the direct listing and the ipo. Generally speaking since going public, how has it been . Has there been more scrutiny on the business . We are focused on delivering value to the customer. It has been the focus since when i joined a couple years ago. That is one of the things we are most proud of. Focus is delivering value to customers. That is true before we went public. It will be true after we go public. Taylor thank you for joining me. That does it for this edition of andomberg technology, Bloomberg Technology is livestreaming on twitter. Be sure to follow our global breaking news network at tictoc on twitter. This is bloomberg. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. You can share 1, 3, or 10 gigs of data between lines, mix in lines of unlimited, and switch it up at any time. All with millions of secure wifi hotspots and the best lte everywhere else. Its a different kind of wireless network, designed to save you money. Switch and save up to 400 a year on your wireless bill. Plus, get 250 back when you buy an eligible phone. Thats simple. Easy. Awesome. Call, click, or visit a store today. Daybreakcome to australia. Im shery Ahn A BloombergWorld Headquarters in new york. Sophie i am Sophie Kamaruddin in hong kong. We are counting down to asias major market opens. Here at the top stories we are covering in the next hour brexit breakthrough. Boris johnson begins the hard sell of his new brexit deal with the eu ahead of saturdays crucial vote in parliament. China says it is in close contact with the u. S. As they work on a draft deal. Gdp figures