tv Bloomberg Technology Bloomberg March 29, 2017 5:00pm-6:01pm EDT
a senior european diplomat says the eu will not seek to punish britain for leaving the bloc, but it will be presented with a divorce bill as high as $63 billion. hasation secretary devos accused her predecessor of -- -- thes her signature signature project by duncan did not produce any significant improvement. president trump's daughter ivanka is joining her husband as an unpaid adviser to her father. she already has a west wing office. her official title will be special assistant to the president. ar husband, jared kushner, is senior advisor. president trump is creating a commission to address the opioid crisis. new jersey governor governor chris christie will lead that commission. present melania trump presented which recognize women
for advocating for justice, gender equality, and women's empowerment, also at personal risk. global news, 24 hours a day, powered by more than 2600 journalists. i'm alisa parenti. this is bloomberg. ♪ selina: i'm selina wang, in for caroline hyde. this is "bloomberg technology." coming up, nine months after the historic vote, the process of brexit is underway. we will discuss what it means for the u.k.'s $25 billion industry. plus, samsung hopes to put a pr crisis in the past. --would hear from the u.k. we will hear what brexit means
for a music app. first, it's now official. the united kingdom triggers article 50. prime minister theresa may vows to get the best deal for this vow tohile eu leaders seek an orderly withdrawal. it could have a huge impact on the u.k. economy and cause a ripple effect across the globe. is sure to industry be affected. with me is joe cross. investors in his firm include paypal and richard branson. joe, your company has been very public and outspoken about its thoughts on brexit. they do not want the u.k. to leave the eu. what have things been like so far. what's the outlook on the company? been a very difficult
time for people involved in brexit and fintech. first, let me explain why this is especially relevant transfer wise. we are a platform for moving money between countries. a huge amount of our customers are people who live international lives across --ders the brexit vote across borders. the brexit vote was averse to one of the things our customers feel deeply about, which is to live the lives they live across borders. a lot of our staff are people who have come to london or to our other offices around the world. they identify with the problem that we solved, which is expensive international break -- bank transfers. our definition -- a lot of our staff are people who are internationals. selina: i want to kick it off to aaron klein, a senior fellow at the brookings institute in washington, d.c. you have written quite extensively on brexit and the
adverse impacts. i want to get your thoughts on how much of simtech -- fintech will be left behind after brexit. aaron: there's no question that london had positioned itself to be a global fintech leader. it was a rare city that included finance and technology, but brexit has thrown that all into mix. it's going to be hard to do business now and going forward with the uncertainty about what's going to happen in terms of london's position as a global financial leader and your basic ability to do business within the continent of europe. to use a more british terminology, it's "an own goal." they just scored on themselves. selina: the u.k. government had invested significant amounts in this. it will be interesting to see how much that puts them behind. a big thing that tech companies have been worried about is the ng policies. just how damaging is this
particular potential policy change going to be to fintech companies? aaron: it will be tremendously damaging if you don't have the ability to go into europe and needed to have a totally different in to the continent regulatory regime. furthermore, the uncertainty about what's going to end up in being passporting will drive investment choices today. if you were a new fintech, why wouldn't you go to berlin or amsterdam or silicon valley or even new york? it's a double whammy about what's going to happen and the uncertainty between now and then. selina: aaron said it. how are you guys preparing for this potential loss of passporting rights? joe: london is one of the few cities in the world that has a meeting of finance and tech. i think that's a really important context to look at. those conditions don't exist with brexit in many of the other cities, where you do have either finance or tech.
it takes a lot to build a fin-tech hub. passporting, -- to passporting, we have to see how it works out. the timeline is going to be very long. it's important to think about how quick startups and tech companies move and how slow policy moves. you are looking at something that happened today. it's a two-year process before anything would even start. then there is whatever timeline those actions take. it is a different timeframe. obviously we are thinking about different scenarios. in terms of what it means day-to-day, it are business as usual -- it is pure business as usual. selina: in terms of passporting, are you looking to get regulated to hedger eu city against the potential outcome?
joe: it's something we might look at. along with expansion comes being regulated in a new country. we are building our own network in as many countries as we can. today, that's about 60 countries we have customs in. it's very much part of our nomura -- normal modus operandi. it's not something we would worry about. no one is losing any sleep about that. aaron: come to america. our remittance system is way too low and costly. we could use information to make people's lives better. fin-tech offers that. i would like to welcome you with open arms to try and solve these problems in the u.s., because we have real problems in the areas you are trying to solve. joe: great to hear. we are transactional here. we are very much here. it's great to hear you validate that the country needs us. aaron: it absolutely does.
the president goes and says these crazy things, that we are going to use remittances to pay for the wall, and it also has a chilling effect. language from political leaders matters in terms of where business is located, particularly in high tech and innovation. joe: people who live across borders or in other countries have a pretty raw deal. anything we can do to make their lives a little bit easier is good. selina: transfer wise, it's very -- transferwise, it's very cross-cultural. how are you thinking about this visa problem? is it a big concern? joe: it's business as usual. the timelines will determine when we need to start thinking about it. what of the talk around theresa may and what britain will push for in whatever their negotiations -- and whatever their negotiations deliver are t he rights of the u.k. and brits in europe. selina: it's no longer clear for
u.k. fin tech -- fin-tech startups if that's the place to be to access the eu single market. do you think investor should put their money outside of london? fin-tech europe hub is up for grabs. london had clear advantagea -- had a clear advantage. then poof, that all went to the wayside. you do have a series of other cities. some are finance hubs, like paris or frankfurt. some are more technology hubs, like berlin. amsterdam is an interesting city that is in play. i would not knock out the united states from this conversation, both new york and silicon valley, where there's been a tremendous inflow of capital into fin-tech in the u.s. global,ry strong,
integrated economy that can hopefully allow for indication -- innovation to come and improve the system. selina: joe cross, u.s. general manager at transferwise, and aaron klein, brookings institute, thank you. a major blow was dealt to consumer protection advocates tuesday when the u.s. house of representatives voted to overturn fcc broadband privacy rules. in a vote largely along party lines, house republicans moved to dismantle rules that required broadband companies to get explicit customer permission for using or sharing their personal data. the data in question includes health information, website usage, andstory, app the geographic information from mobile devices. the rules intend to tighten they said -- tighten data security requirements.
its new flagship smartphone called the galaxy s8. the company knows it's got to get this one right. that's because samsung the last -- samsung's last major launch ended in disaster. users posted in send year he videos, showing the phone -- incendiary videos, showing the phone catching fire. after she got browns of global recalls, the entire note -- after two rounds of global recalls, the entire debacle is said to have crossed the company billions of dollars. apples share of sales -- apple's share of sales edged past samsung ever so slightly, by a margin of just 256,000 phones. before that, samsung had beaten apple every quarter since the end of 2014. sizes,'s s8 comes in two both larger than the latest iphone.
the s8 comes with encrypted facial recognition and a virtual usersant to give samsung an equivalent apple's siri or amazon's alexa. is it safe? the company has been touting a new eight point battery safety check in commercials released earlier this year. investors appear confident with samsung shares trading at a record high, but samsung faces another test later this year when apple is expected to roll out the 10th anniversary version of the iphone. selina: that was bloomberg's caitlin meehan. -- kaitlin meehan. is this the product that turns around samsung's fortunes? joining us is ronald lummis -- llamas. also with us, david kirkpatrick.
ramon, it's been a rough few months for samsung. been one negative headline after another, exploding the heir apparent caught up in a corruption scandal. can one phone turn this around? mon: one phone is a very important first step to getting this turned around, that we shouldn't just look at the phone itself. it's a beautiful phone, an elegant device. take a look at what samsung has done. a very thorough investigation, extremely transparent with the process. an eight point process they are comfortable with, to the point where they are trying to champion it and advise some of its competitors to adopt. when you put all that together, i have to think samsung is feeling very confident that they solved the problem. even today, at today's presentation, they referenced what happened and underscored
their commitment to quality and safety numerous times, without having to rehash the whole thing again. as far as this device is coming out as the first device after the medical -- battery debacle, it's a strong step for samsung. selina: ramon called this phone "beautiful" and "elegant." what has consumer reaction been like so far? david: it is beautiful. samsung made a good move delaying its initial -- it underscores how seriously they take the process of getting it.ight before they release will it turn around the company's fortunes? i think this company had not uber-scaler -- not problems, but a lot of challenges facing it. you mentioned alexa earlier in kaitlin's report.
the smartphone era is kind of ending. we don't know exactly what's coming next. in the short-term term, this phone will probably sell very well. selina: i want to take a look at samsung's market share. fell below 20% in the fourth quarter for the first time in four years. they obviously have competition coming from apple on the high end, but they also have lots of up and comers. ramon, what do you think is the main source of pressure there? what's causing this drop in market share? ramon: if you take a look at where samson is competing, it clearly had its position staked competing, it is clearly had its position staked out in the high-end. as you go further down to the midrange -- down into the midrange, the low-level, the entry-level range, that's a dangerous part of the market to play for samsung, even if they can get scale, because it ends up being a contest for how low can you price your smartphone.
if you look at some of the vendors, a number of smaller and regional companies that compete , that aren asia willing to lose money in favor of gaining market share -- it's a very dangerous market to play in, when the market itself is growing at about single-digit territory. as far as the s8 is concerned, this is going to help samsung cemented its position in the high-end and hopefully generate money. selina: these are going to be quite pricey. it seems like the iphone 7, 7-plus will be the main competition until apple comes up with its latest phone. what's your reaction on how this may stack up to what's coming from apple? david: one of the things that really matters is china, and it's not just because china has several competitors, but also
because the market is so vast there. it's also a country which is increasingly, in many industries, but in this one, putting special preference on local champions. i think that's a challenge for both apple and samsung. probably,i think, this is going to kind of keep the competition with apple relatively stable for the short term. the real open question is how great is the next iphone, and we don't really know yet. but if it's great, that could be -- apple still has a better brand by a long shot. it still commands the sort of halo of the top of the market, and i don't see that changing. selina: before we move on, i want to get your thoughts on this big corruption scandal. heir apparent jy lee in jail. do consumers even care? ramon: absolutely not.
if anything, this may be a concern for investors and perhaps competitors, in terms of analyzing samsung's strategy going forward. if you ask the next, oh, 20-year-old male camping out in line at your favorite carrier, is it really going to matter to you what the leadership is doing, chances are he is going to say probably not. he wants to play with the device from dawn till dusk. selina: great analysis. as wellamas, thank you, as our guest host for the hour, david kirkpatrick. in the latest tech revolving door, intel is moving up the head of its mobile device chip unit to a broader role as chief strategy officer. has been -- the company began to make headway in that effort last year when apple chose intel over
qualcomm for the chips in some of its smartphones. evans will now report to intel cfo bob swan. still ahead, toshiba's westinghouse unit filed for chapter 11 bankruptcy protection, citing as much as $10 billion in debt. the tech giant is still facing challenges on several fronts. this is bloomberg. ♪
selina: toshiba's westinghouse has filed for chapter 11 bankruptcy protection. toshiba warns it might have to take a $6.2 billion write-down. westinghouse has been struggling with project delays. toshiba may sell a majority stake in the unit. another huge ipo may be just around the corner. buzzfeed is wrapping to go public next year. pasteo has turned down
buyout offers because of its long-held plan for an ipo. it has been rapidly expanding a broader platform. among its business -- biggest investors is nbc universal. amazon stock hit a new record barclaysfter initiated an overweight rating. shutting down a division which it acquired for about $545 million in 2011. amazon says it has been unable to make the owner profitable. stock to wednesday's gains, jeff bezos has become the second richest man in the world. according to the index, bezos has a net worth of $75.6 billion. coming up, brexit is officially underway. the man at the helm of u.k. tech
the eu. candidatesidential marine le pen was told by the french national treasure three years ago that her party would have to plu its deficitg with eu money. she was informed that her spending was spiraling out of control. the party is being investigated for potential misuse of parliament funds. the u.s. ambassador to the u.n. says the organization is partnering with a, quote, corrupt government in congo. she supports a massive cut in the world's largest peacekeeping mission there. her comments came a day after the bodies of an american and swedish investigator were found in a shallow grave. it offers israel -- the declaration was issued at the end of the annual arab summit in jordan. the palestinians want east
jerusalem as their capital city. japan's ruling party wants the country to arm itself with its first offensive weapon since world war ii. it will also recommend improving the missile defense system. testskorea's missile raising concerns. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm alisa parenti. this is bloomberg. it is just after 5:30 p.m., wednesday, here in new york, sydney.. in paul allen has a look at the markets. a prettys looking like quiet day around the asia-pacific. the index is looking pretty flat. nsx futures are pointing that by just five points -- asx futures are pointing up by just five points.
a billionaire was behind the purchase that sent the stock storing -- soaring. over in japan, the nikkei futures are looking a little weaker. keep an eye on toshiba today. that company has been having a pretty bad year. there will be an extraordinary shareholder meeting today, where shareholders will get to question management for the first time about the u.s. nuclear unit bankruptcy and the sale of the possible chip unit as well. i'm paul allen in sydney. more from "bloomberg technology" next. ♪ this is "bloomberg technology." as we mentioned at the top of the hour, u.k. prime minister
theresa may has officially triggered article 50, kicking off the formal process of brexit negotiations with the european union. technology was flagged as one of the british industries that would suffer the most in the wake of the brexit vote. access to funding and top tech headlines are both major areas of concern. when -- one tech company that knows a thing or two about the u.k. tech landscape is london-based shazam. joining us now, shazam's ceo rich riley. and still with us, david kirkpatrick in san francisco. rich, you guys are keeping the headquarters in london, but you are opening a new office in berlin. did any of this fear of talent fleeing the u.k. go into this analysis? london. grew up in it's been a great home for shazam. our team in london is from over 30 nations. we certainly hope it does not cause any anxiety or issues for
them. i have discussed with the mayor of london and others that london's ability to track -- attract talent from around the world is one of the things that makes it truly special. i certainly hope they navigate through the so-called brexit and are able to maintain that. selina: there is still much navigation to be done. in the meantime, how are you gearing up for potential changes? rich: we are keeping a close eye on it, but we haven't changed the way we are doing business. selina: shazam has had some pretty big milestones lately. you have reached off at ability, reached the $1 billion download mark. what's in the works? how are you going to keep users spending more time on the app? rich: we have some interesting things we have done recently. we have been integrated directly into snapchat. users can now hold down the screen on snapchat and it will shazam and return an experience
that, so far, users are really loving. we have an idea how to expand that. app has been downloaded over one billion times. we have a tv show coming. it is on may 25 and every sunday -- thursday this summer. it will be the game show "beat foxx.," hosted by jamie we hope that people enjoy it. i think it's the first time an app has had a show. we are doing it with mark burnett, who has done "apprentice" and "survivor." selina: i will definitely take a look at it when it comes out. over to david. david: shazam is one of the few companies that has become a verb. you have done, frankly, from my point of view, even a better job than i would have guessed, not just surviving, but thriving.
i'm curious if you could talk about, what do you think a single one or two things are that you have done that really explain the survival and more than survival, getting to this new position where your partnering with snap and doing a lot of really cool stuff -- where you are partnering with snap and doing a lot of really cool stuff? eyes we've never taken our off the ball in terms of being the best in the world at giving the user what they want when it comes to music. we try to make it faster, better, more accurate. we are very proud that our user ratings right all-time highs on both ios and android. that is something we watch very closely. we are constantly trying to earn our users' love. the associate our brand with magic. internally, we talk about delivering magic together. i think that focus and effort has proven, in terms of the sustained popularity of the service. selina: shazam seems to have
taken the lead in terms of augmented reality marketing. you have already started some partnerships. how's that been going so far? do you think consumers are ready to interact in this way? our business model is primarily advertising, which has been a transition for us. we launched the ability to visibly shaza m things just over a year ago. we recently launched what we believe is the first scaled augmented reality offering. add augmentedn reality to any printed thing, and it's accessible through shazam. there are a lot of augmented reality startups and capabilities, but there are very few that are on hundreds of millions of phones. we bring in scaled augmented reality and make it easy for brands to create the experience. we are excited about that. we have a view -- few big
campaigns coming up. there's a lot of excitement as advertisers try to figure out how to bring packaging and other things to life. david: this augmented reality thing does seem to make an awful lot of sense. we've gotten used to sort of pulling out shazam to find things out about the world around us. there really aren't many other apps like that. maybe google maps at a larger scale. do you think of it that way that because people have the habit of shazaming things with audio that they might naturally segue over to a more visual experience? rich: we do. we think that shazam and our brand and our verb -- it's a one -cap connection to the world around you. we have a camera now on the home screen. we use that to connect people to brands. when we partner with a brand, they will put an action on the packaging so that the user knows what to shazam and what they get
for shazaming something. all kinds of things that are different value propositions. we were on hundreds of millions of coke bottles this summer, for example. we think it's a natural extension of our use case, but still a lot of user education required. selina: i know you get this question all the time. the company has been around since 1999, has raised over $100 million. what's the exit plan? rich: the plan is to build the best shazam we can. we were very proud to achieve cash flow profitability at the end of last year, which is a milestone that, as you know, many startups never achieve. one of the great things about that milestone is you really put yourself in control of your own destiny. cash flow positive with plenty of cash gives you a lot of choices in terms of which way you go. keepe meantime, we will
building the company, doing big partnerships, doing great things with brands and tv shows. selina: you are on the show not too long ago. you said you guys were sprinting towards an ipo. has that changed? be a strongt to stand-alone company that has predictable revenue streams and growing revenue streams and is able to control its burn rate and be profitable. we are always tried to be a great stand-alone company. then we will decide whether that ends up in the public markets or as part of a bigger platform. selina: what do you think your investors would want? toh: our investors want us build the best company we can. they appreciate how rare it is to have a brand like shazam that is truly known and loved by hundreds of millions of people around the world. the costs of replicating a brand like that would be well north of $100 million. figuring out what we can do with the brand and build on this platform -- they are all very excited about the future.
selina: rich riley, ceo of shazam. we are going to have to stop there. david kirkpatrick, you are sticking with me. analysts remain bullish on the stock, despite samsung unveiling its latest smartphone. where does wall street expect apple's next big source of revenue to come from? we will give you a hint. it's not iphones. this is bloomberg. ♪
the goal is to attract small and --ium-sized is is is is medium-sized businesses to the platform. this is ahead of a potential ipo with a target of more than $500 million of revenue this year. we will speak with the president of pinterest in an exclusive interview thursday about this new initiative. slightlyres edged up in wednesday trading, closing at a record price, just over $104 -- $144. one analyst raised his price target to $185 per share, calling it one of the most underappreciated stocks in the world. a longtime apple watcher also released a bullish note focusing on revenue from apple's services segment. still with us is david kirkpatrick. in new york, alex webb, who covers apple for "bloomberg technology." we had the big samsung
unveiling. does that put a damper on all the hype around apple's impending iphone later this year? alex: apple did capitalized significantly -- capitalize significantly. it gives them a head start. the crucial quarter for any smart phone sales is christmas. the three months leading up to christmas, that's where the big sales are done. apple usually releases the product just ahead of that quarter. it's hard to make any particular judgment until we have that out on the market. selina: i want to get your thoughts on this chart as a take a look into the bloomberg terminal. apple has had some slowing iphone sales growth, as we see in that most recent quarter. there has been a bit of an uptick. what do you attribute that to? alex: it was interesting, the last quarter of apple sales.
the growth which they experienced they attributed to new customers, not customers upgrading or swapping their old --one for new iphones iphones for new iphones. if apple releases iphone which is an significantly better than the previous one and people still decide to switch to it, the strength of the brand is holding up. if you extrapolate that going forward, the expectation is that -- is that the iphone proves to be the phone that everyone is expecting, then -- selina: something that's become more apparent is that apple needs to build up this service is part of its business as hardware continues to slow. can apple do that fast enough before facebook and google can expand and hardware? david: that's a really interesting question, selina. i think it's pretty funny that
somebody should call apple one of the most underappreciated stocks, considering it's the highest valued company in history. it's at an all-time peak. on the other hand, there is a certain logic to that. both those analysts you mentioned are very smart guys who have been around a long time. isles he/eat -- apple's p/e lower than facebook -- google or amazon. you can't just make more with no-cost. itspple could build software and services business and actually get revenue from it, then they could really get into a new category and, believe it or not, even with their astonishing current valuation, build on that. i do think that's a possibility. do i see evidence of that happening yet? no, i don't. i think apple has done a relatively poor job building services and software business. just one example, look at the apple maps compared to google maps.
how many people on the iphone routinely use apple's maps? only people who aren't aware of how good google's maps are. they have a high bar to reach. selina: you read about how they are beefing up this app ecosystem. what do they do to make it even better, the software and services part? traits that close to 16 times -- apple trades at close to 16 times. , the appes growth store. gene munster estimated it grew 40% last year to 8.6 billion -- a tinyllion, so it's slice of the pie, but it's very high margin. they have to give developers what they want if they are going
to convince them to build apps which not only are compelling, but drive returning revenue. that's why they give more subscription revenue to developers. previously, you might pay $4 for it once or twice, then you are not given any reason to keep on using it. they want developers to build apps that have a lifespan that drive returning revenue. you are pumping data into it, which makes you dependent upon it. selina: which part of the software services do you think has the most potential? they have the cloud, music, apps. david: in a way, it's the cloud. the real holy grail is annuity businesses. if you can get people to pay you a subscription for something, music is essentially a cloud service, those are the kinds of things you want to go to work. anybody who can get that right has basically ability to print money.
apple has not proven it can do it. i don't rule it out. selina: david, thanks for joining us. alex, thanks for coming by the studios. they have a dirty reputation, but china is attempting to clean that up. we will bring you the latest from the world's biggest coal producers next. this is bloomberg. ♪
selina: dominoes will start using robots to deliver pizza in europe. vehicles areing made by starship technologies and will deliver pizza to customers in germany and the netherlands. what's the catch? customers must live a mile within certain domino's outlets. this is not the pizza chain's first rodeo with innovative technology. they delivered a pizza by drone
in new zealand. while the trump administration is vowing to invest more in coal, china is trying to take a global lead in cleaner technologies. china is the world's biggest co2 emitter and coproducer. bloomberg got an inside look at how the largest state own power producer is trying to scrub not only the skies, but also the dirty image of coal. >> china feels this is one answer to its towering pollution problem, a new power plant that the industry likes to call "a clean coal burner," spewing far less toxins than the older generators. this was opened in november by --, which invited bloomberg for an exclusive tour. coal is cheap and abundant, but it's the world's biggest source of carbon emissions. china is moving towards more renewable forms of power tran smission.
the move to renewables takes time. should retain its dominance in china's energy supply. first off, china is rich in coal and has less gas and oil. it's a fact that there are many poor people in china. coal is the energy for poor people. >> we are building new coal-fired power plants that are cleaner than gas plants, cleaner than the average coal-fired power plant that operate in many of the developed economies of the world today. >> it does not measure co2 emissions on site, but we could nox,hat they call sox and the emissions of sulfur oxide and nitrogen oxide. the government gets this data real-time and can punish the plant if emissions get too high. >> [inaudible] >> burning cleaner coal does
have its costs. it is spending a little more than $1 billion over the next two years installing the clean coal tech at a time when china's coal and power industries are in forms of crisis. >> they have overbuilt. there's more capacity in electric power generation than any other sector in china. is in then neighborhood of 50%. this is a neighborhood with extraordinary high utilization costs. when utilization falls that low, there are huge losses. >> it argues that president plan for reviving the u.s. coal industry can lead to cleaner solutions. >> we believe that president trump will be looking at this sort of technology for deployment in the u.s. >> does not hurt your sales pitch when the weather does its part on one of the clearest, blue sky days so far this year. selina: that does it for this edition of "bloomberg technology."
on thursday's program, we will be speaking with pinterest's president in an exclusive interview. remember, all episodes of "bloomberg technology" are now live streaming on twitter. out weekdays at 5:00 p.m. in new york, 2:00 p.m. in san francisco. that's all for now. from new york, this is bloomberg. ♪
♪ from our studios in new york city, this is "charlie rose." we begin this evening with more questions about the russian hacking of the political process, and also about accusations against the obama administration from president trump. calls are mounting for the republican chair of the house intelligence committee to recuse himself in the investigation into russian meddling. the chairman admitted he met with a source on white house grounds last week to view secret reports. he suggested that had potential surveillance of president