Transcripts For BLOOMBERG Bloomberg Technology 20170204

Among those penalized for supporting the missile program. Meanwhile, iran is retaliating with sanctions of its own. They say they will respond in kind to the treasury sanctions and have a list of u. S. Companies they say support regional terrorist groups. A judge refused a request from a his attorney. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Caroline i am caroline hyde, this is bloomberg technology. The Resistance Continues as tech closes ranks. Americas ability to recruit top talent from overseas, our panel debates. Two days before the biggest oneday sporting event in the u. S. , the world of daily Fantasy Sports is hoping to score a touchdown. The ceo of draftking gives us his take. Snap reveals its complex relationship with google. We will break it down. First to our lead, employers jobs in january, the biggest gain in several months. Reports that President Trumps next executive order relates to immigration could cake could take aim at work visas. Many Tech Companies rely on immigration status for highly skilled foreign workers. Critics say it is a way for Tech Companies to hire cheap workers overseas. Michael solomon is the ceo of a recruitment firm. The criticism is there on the h1 visa. It is misused. Cheap labor program. You have written about this at length. Is it the case that it is being misused . The minimum requirement is well below the average salary that software engineers, particularly in the Technology Industry would be earning. There is a great Business Model, they can bring people in with these wages, but this harms the bay area in particular. Caroline there is the argument to some extent that your concern is that if we lifted the minimum wage, we would see a skyrocketing in the amount that are being paid and pricing some companies out. I think if you were going to compare, you would see a very different look at the kind of people they can hire. As soon as you work to level the playing field, youre going to see a big challenge ahead of us. Overall, part of what is not being said in this conversation is this is not just about Tech Companies. Entire economy is filled with companies that are all technology companies. They all need great tech talent. If we throttle the pipeline, we will see wages rise and a real shortage for companies that need that kind of high skilled talent. Caroline there is a case of throttling being made by michael. You feel there is a way of changing the h1b visa . Michael had some good points. Some companies dont have the same financial resources, but if we look at the proposals, the minimum wage would be up to 130,000 a year. We need to look at what people in the Technology Industry are being paid. That is well within the range. I dont see a startup being disadvantage. The throttling in Different Industries is an issue. These are the kind of issues that should be debated. I think adjusting potentially by industry and carving out different requirements for different types of work is something that is worth discussing. Caroline michael, i was reading that 150,000 new jobs per year are treated in tech. Created in tech. Visas really need 85,000 to fill that . Is the talent pool in United States so small . Sadly, it is. There is a shortage of about 110,000 per year. We are seeing and will continue to see until our country makes it a priority to educate people differently starting in grammar and middle school and high school, were going to continue to fall short. I agree with what haj was saying about a minimum. It ensures that the jobs are going highly qualified people and are not taking away a job for someone who could do it here. Caroline it sounds like you are both talking about this needs to be debated, not rushed through. We need people at the table discussing this with donald trump and congress and the senate. What about your client response thus far . The travel ban, as well. Are we seeing people fearing getting jobs . With applications from engineers across the world, especially those who have special visa arrangements with the u. S. Australia and canada are examples. It is easier for them to get into the u. S. To work. Were already seeing canada begin to pause their job search. There is so much uncertainty. Caroline michael, same question. Are you seeing a concern from people looking for jobs within the u. S. , and your clients, are they looking to hire outside the United States . Are they looking for more offshoots . We are absolutely seeing this and have a situation right now where some of these people are trying to rush through a visa for fear it would not be available in a few months. There is fear and panic going around everywhere. I think we dont come up with a at a way to approach this, we are going to see industrywide and economy wide problems we dont have enough people and people are no longer choosing to come here to innovate. There is a story floating around about a gentleman from india who could not get a visa and ended up forming what is now a 7 billion company in india because he cannot do it here. Of course there are a lot of factors that might have been different, but do we really want to drive those kinds of businesses and entrepreneurs from our shores . We have to look at this very closely because innovation is popping up around the world and people will go where the talent is. Caroline a word of warning to the executives in the United States. He will see if the executive order takes some of this on board. Thank you both for your time. Coming up, a trend is emerging. Investment spending is on the rise. We will dig into what that means for the tech giants. Caroline a stock we are watching. The maker of Data Visualization software exceeded estimates. It is encouraging investors who had seen growth underperform in two of the past four quarters. The ceo is trying to transition the company to cloudbased subscriptions. They announced stan miller as the executive Vice President of worldwide sales. The position had been empty for year. Large internet comings are increasing their r d spending. What is behind this uptick . Joining us is a manager of managing director of internet companies. Great to have you on the show. You noticed this trend. I wanted to get your perspective on why. Facebook, 50 growth in operating. That is a big step up. Amazon is deciding on things like india, video content, amazon fresh. Google has not given so much guidance, but the margins were down, all of these companies are almost certainly accelerating their spend. For amazon, the big ones are fresh, getting more video content into customers hands. It is building out the alexa system. Facebook is making bets on vr. They have new areas they want to invest in. They do they have reached a point of scale but not a point of maturity in there are a lot of new investment areas. Caroline you mentioned margins. Want to bring you to the operating margin of facebook. It has been on a relative upward trend. This is a great piece of bloomberg intelligence. You can go into the vi take her. Is that going to increase . Probably not. They can probably keep it where it is, but they have the same problem as google. Their core business is extremely high margin. For facebook, most things they going to will probably be somewhat diluted, but not dramatically. The opposite end of the spectrum is amazon. That is the wonderful shift towards Cloud Computing for them. We think there will be a shade lower. Company twitter, the we love to hate, it would seem, we have seen twitter user growth slowed down. You get the monthly active users overall, 17 million. Will that increase in any way . Users have plateaued. Users. U. S. , 67 million the Revenue Growth is about six or 7 . That does not give them much cushion. If you grow like facebook, google, and amazon, you can have a major investment cycle. But not if you are twitter. This level you are saying seeking. We have had a lot of executive departures recently. Great test. A we have a president who came to power because of the use of this platform. If there is ever going to be one order where users pop up, the should be at. If they dont, it raises many questions. Is that the paradox . It has not gained from Donald Trumps love . The twitter challenge is that it is great to go to twitter to see Donald Trumps comments. You can see them anywhere. Networkig broadcast that they have lost the direct appeal to their site. Lot. Illion users is a mainly journalists and celebrities talking to each other. You must be right. We have seen the Revenue Growth taper off. We will watch that stock closely next week. Always great to get your perspective. Thank you so much. The countdown of super bowl 51 is on. This is bloomberg. Caroline apple will begin assembling iphones in india by the end of april. This is according to a regional minister who said it will be done in bangalore. India is the fastestgrowing market. The move could also be a way to score brownie points with indias government. Super bowl 51 is just around the corner. The annual championship game is the biggest event for the nfl. One company that depends on the nfl is draftkings. We checked in with their ceo. An interesting question, because Fantasy Points typically reward offense. There is a defense position you choose, but it is one of several on the roster. Atlanta actually had a few extra Fantasy Points and bigger performances. If you factor in the defense, new england has the edge and will probably win. It could go either way. It will be exciting to watch. Caroline what about commercials coming from you . Are you putting your Marketing Budget to work. There was a lot spent this time last year. Is that being cut back this year . We did not do much advertising this year. Weve never done a super bowl commercial. It doesnt make a lot of sense, we advertise at the beginning of the season. Being 2015,ast year we did a tremendous amount of advertising. This season, not nearly as much. Caroline for what reason . Last time, we got some blowback that we went overboard. People were getting sick of the commercials. There was a business benefit but we felt like after such a heavy advertising year, it would make sense to not go so heavy the following season. Caroline you are now looking for new customers in new regions. You have a license for malta and youre looking at europe. We have been granted a controlled skilled gaming license in malta. In europe, if you are a member of the e. U. , and you have a license, you can operate it anywhere as long as the place to operate and doesnt have their own explicit regulations. There are a number of places in europe that dont explicitly operate in the skilled gaming category. We can enter any of these countries, germany is the largest market and will be our first. Caroline a date . By the end of the quarter. We will have an announcement soon. Caroline 57 Million People playing Fantasy Sports. Where is your market share . We are pretty small. We have about 7 million registered users and about 40 of the customers pay. We are relatively small. We are excited about the future. The next wave will be about capturing the people who bring in their friends. Caroline you are going to be merging with another company that is going through antitrust regulation. Where do you stand . We are still working to get that through the fcc, and that is something i should probably not get too into because the lawyers will get upset, but it has been very well received by consumers. Everybody is excited because there are so many things weve been asked for by our customers, innovative things that i think are really going to transform the game and make it better and more exciting. We have not had the resources to do it. Both companies have been double paying for so many things, recently a lot of lawyers in that category, and it doesnt make sense when you know you could be driving innovation faster, you know you have customers desperately seeking experience and you want to get it done, the hard part is having the resources to execute. What gets me excited about the potential for the merger is we will be able to deliver a better product to the customer then we would be able to as a single company. Caroline those legal fees doubling up, they might be needed to persuade you dont own too much of the digital fantasy space. How much of the market would you own together . 95 or something . How would you convince them . There are about 57 Million People playing Fantasy Sports, and the majority are playing on espn and yahoo and cbs. We are small relative to those. The daily version of the game is relatively new. Yahoo is the only one in that group that offers it. There is no reason the other Companies Wont jump into it when he gets bigger. We feel like right now, with 7 million registered users, were pretty small potatoes. We want to compete with the big companies. Well want to be a small piece. They want to be a big these of that 57 million playing. 57 is only about half the number of people that claim to be sports fans. There is a lot of room with innovation and coming up with new type of creative contest to reach a broader audience. Caroline that was draftkings ceo. Coming up, as flashy 3 billion ipo. We will break down everything this week in tech. You can now listen to us on the Bloomberg Radio app and on sirius xm. This is bloomberg. Youre watching bloomberg technology. The white house made clear today that it will honor a refugee agreement with australia struck during the obama administration. That is after reports of a heated phone conversation with President Trump and the australian prime minister. It is something hes extremely upset with. He does not like the deal, but out of respect, he will allow the process to continue under the conditions that had been set, there will be extreme vetting. The deal calls for the u. S. To resettle a group of refugees currently being held at detention camps in new guinea. An investor plans to take a nikki haley plans to take a closer look at you in peacekeeping operations. This comes as part of a goal to reduce contributions to the world body. She is focusing on 16 u. N. Missions. Europe will work with the u. S. Even if they cant find Common Ground on a host of issues according to the irish prime minister. He spoke at the eu summit today in malta. Your president has a different personality. There is no reason why europe cannot work with the u. S. We have to focus on working together. U. K. And ireland will avoid a hard border when brexit is finalized, he says. After 38 years in power, angolas president says he will not stand as the ruling partys candidate in the election in august. Negotiations to release a doctor that allegedly helped the cia pinpoint Osama Bin Laden is gaining traction. He has been jailed in pakistan for five years. An attack outside the louvre in paris is bringing of concerns of the citys ability to host the olympics. The assault was the latest in a wave of violence that has left 200 people dead in france over the past two years. Dispatchede has been to protect the coast of yemen. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Caroline this is bloomberg technology. It has been a full week since President Trump signed controversial executive orders on travel to the u. S. This week, he seeks to continue to progress his agenda. To pursue his progrowth agenda. Elon musk addressed concerns in a statement, saying he plans to bring this concerns up in a meeting with the president. What went down behind closed doors . Kevin joins us. Give us the inside track. Taxes were looked up, was immigration . Yes it was. A lot of ceos not only from Silicon Valley but the Business World and more traditional wall streetmain street nexis. The sources i am speaking with familiar with this meeting tell me the concerns were made clear at the meeting. There was controversy with the uber ceo saying he would drop out of the advisory board. This is an interesting dynamic because quite frankly, these ceos spent the last eight years complaining about president obamas regulatory policies, but are now facing criticism from a potential consumers not only in Silicon Valley but throughout the country who are concerned and disagree with the president s policies, but they still need to engage. That is the tight rope a lot of these folks are having to walk. Caroline certainly, we were hearing that the head of blackstone, he was talking about the fact that the uber ceo was not there. Are there any other difficult situations . Any other ceos under pressure . Look at walmart. We are around the corner from a major tax reform package to come out of Silicon Valley and a groundwork is already being late on capitol hill. Theyre working with the house financial committee. Walmart is one of the largest retailer to garner an adjustment tax. Not only does this impact immigration policy, but also the border adjustment tax. A huge opposition from the retail industry. That is brewing and that was brought up at the meeting. Caroline the overarching focus for President Trump is job creation. Particularly in manufacturing. This is something elon musk has, he says, i can make jobs in america. People working in harmony together. What about the tech situation . He has pushed for a flat tax on carbon, that is something he brought up the other week in his meeting with the central. With elon musk in particular, he i think is one of the folks who has carefully navigated not being perceived as being overly effusive of being a part of the president S Economic Council and advisor, informally. He has walked that line because every meeting he has raised criticism, against environmental policies, the immigration policies, and he has walked that line perhaps more than other ceos. Caroline i cant thank you enough. Another great interview. Thank you for saying late for us. Earlier, we spoke with the bloombergs news editor and sarah frier about President Trumps executive orders and highlights this week. Were getting a strong picture of what his orders are going to be like, what he is going to be like as president. It is like the trump we saw before the election. There have been different reactions. The travel ban sparked a strong reaction across the technology sector, as you have been following every day here on bloomberg. One person was resized as not having a strong of a reaction as other people. That raised the hackles of a lot of the drivers and customers. The ceo of uber could do no right. They revealed that he would not be part of the council and would not come to washington. It was more in his interest to leave the council and save the business. We have learned that 200,000 people deleted their uber accounts. That is significantly higher than what happens in any given week. They were still growing, but 200,000 is a big number, and uber was really listening to. I was in an uber last night and my driver told me that he was going to go to lyft. He said he was concerned about the political ramifications. Caroline many feel that the criticism from Silicon Valley should be taken to donald trump. The Silver Lining this week, snap, it was official. They went public. They have been private for so long. We got to see their revenue numbers, their lack of profit. Their loss was greater than their revenue. We got to see their user growth. We get to see how it has been flowing. Caroline 158 million. It is a healthy company. It has had an impact on how we communicate. Were sending things more visually now. We are talking to each other in a way that is more raw and natural. Snape is not polished like instagram. I am one of the people im a millennial. I think what is interesting from the filing is they are setting themselves up to not be compared to facebook and twitter. Dont know if they will get away with that, but you dont want to frame themselves in the same way. They are not trying to conquer the world with user growth. They want to focus on developed countries with healthy mobile ecosystems. Their video and image has to work on the phones. Caroline it was a big week not only in terms of ipos being announced and the public being able to get into the details, but the earnings details like apple and facebook. Break it down for us. We saw a significant pop in shares. There were questions about the average selling prices for iphones. Were people going to go to the lower selling phones. The iphone 7 did very well. The even higher end of the two during that critical holiday season. This is where apple get a lot of sales. They really came through this time around. Caroline tom giles and sarah frier. Coming up, we continue to dive into the latest details from snaps ipo filing. That is next. Caroline more on the biggest social media ipo since twitter, snap. Among the details, a 2 billion deal with alphabet to use google Cloud Services. Investors should consider this before buying the stock. For more on the complex relationship, were joined by mark, who covers alphabet. Not just a supplier, but a competitor. Facebook is looking in their Rearview Mirror and rightfully terrified of snap, because snap has hit the millennial mindset. There is this paranoia about millennials not using email at all. Theres always a fear that it will drop their products. Snap has been developing some services, there are a lot of things available in the app. Caroline it is not just youtube or gmail under threat, but the hardware element. We had google glasses and now we have spectacles. Spectacles have been more effective than google glass. Glass was more serious. From what i understand, snap has a lot of ambition in the world of wearable computing and augmented reality. That is something google has invested a lot of money and resources into. Caroline on the ar front, as well. Also fascinating is the limitations that using googles Cloud Computing services could put on the Regional Diversity of snap. A lot of companies are diversifying their portfolio, putting a lot of money with google, amazon, microsoft. Snap seems to be putting a lot of money in google. They were one of the earliest customers and our kind of locked in. They could go over to amazon, develop their own, they have a lot of people with experience with that. I mentioned china. Google right now does not operate with Cloud Services in china, that is an area where they might turned amazon. Caroline i remember, before microsoft really developed its own cloud, it used amazon web services. There are a lot of frenemies. Alphabet is one of the biggest investors in uber, but they are also competitors. Theyre doing some driving cars and mapping services. I doubt that google is sitting around the board room saying, what are we going to do about snap . I dont think theyre terrified of it. There is it is certainly an upandcoming company they want to watch closely. Caroline keep your friends close and enemies closer. Mark, thank you for the insight. Coming up, super bowl 51 is this sunday. We will discuss next. This is bloomberg. Caroline in this edition of out of this world, the satellite imagery company is buying alphabet satellite imagery unit. In return, google will buy satellite images from the company in a multiyear deal. Financial details were not release. Google changed the name to terrabella. The biggest sporting events of the year is happening this sunday, super bowl 51, and tech will play a big role for the millions watching around the world. For the first time during the broadcast, users will have the chance to be the player. Imagine what it would be like to step onto the field for the biggest day on the nfl calendar. Imagine no more. Intel is helping viewers get out of the armchair and into the arena by equipping the stadium with 5k cameras, each capturing short video lips that when video clips that when pieced together, give viewers a 360 view of the game. Intel claims this technology will revolutionize the experience. Not just on super bowl sunday, but every game. Last year, they acquired a startup for 170 billion. 170 million. Intel wants to capitalize on the technology and make the experience even more personal for the viewer. In the future, every fan will have a player in which they can get this video format and see whatever it is they want to see on their own and they can pick whatever player they want to be a player for. Caroline sticking with the super bowl, tv ratings could be an uphill battle for fox, who is broadcasting the event. So this could be due to walk some of this could be due to cord cutting, but fox is taking a new approach, allowing fans to stream the game online for free. Joining us now is jason. Jason, you have invested in a number of sports streaming services. The mind boggles, fox is disrupting itself. Why is it doing this for free . They pay a lot of money, i dont know what they pay for the rights this year, they obviously need to make a lot of money. One way to think about this is that advertisers bring a lot of dollars, in this is one way to make sure the advertising inventory is expanded so they can sell into that. They also have fox go, or online streaming platform. Theyre using this as a way to bring exposure to that for consumers that may have not heard of it. Cbs did the same thing last year. I think they got about 1. 4 million viewers. The estimates ive heard so far for this year could be maybe 15 million users watching on the internet. Quite a jump. Caroline this is to whet their appetite of people who have cut the cord. The companies you invest in charge for the privilege of streaming. Sports is certainly a unique content asset. As you look at the overthetop streaming services these days, they are spending the lands of they are spending billions of dollars creating original content. It is crazy. Why are they doing it . In the that some part of that portfolio will be compelling and will draw people in and hold them. With sports you have essentially guaranteed drama. That is why you have Companies Like cbs and turner with march madness, i think it was 9 billion dollars through 2032. It is a long ways away. That is one of the Things Holding people to their cable packages. I think starting this year we will see more compelling offers like skinny bundles that really for the first time, give sports fans national and regional coverage of the sports they really enjoy and give them the freedom to jump away from cable or they have not done so far. Caroline in the united kingdom, they launched an entire tv to get people on the internet and mobile phone. So many ways you can slice and dice this. I think sports is one of those things where people have time and again been willing to pay for it, whether it is to get access to packages. The sunday ticket, which directv has had for many years, has had has been a hallmark. People want to see sports online. We created sling media, wanting to get people to watch sports in more places. I think there is an appetite for paying on sports. There is also a massive Business Model advantage when it comes to the viewing behavior. This is the one type of content people are still watching live. There is no such thing as a Binge Watching sports. You are going to watch the advertisements. Services like netflix, if they were going to incorporate sports, you are not going to turn off houses cards. You are not going to binge watch house of cards. There is an efficiency to sports that is quite attractive. Caroline will cable still be outbidding the top providers in five years time . I think it will go slow because you have multiyear contracts. I think you will see these bundles draw more and more users. They will be other bidders at the table. Caroline the competition gets even fiercer. It has been great having you. Enjoy sunday, as well. Now, that is it from bloomberg technology. Enjoy your sunday, this is bloomberg. The following is a paid advertisement for time lifes music collection. Hes got the whole world in his hands hes got the whole world in his hands hes got the whole world in his hands Country Music is about life. One day at a time sweet jesus