tv Bloomberg Technology Bloomberg June 5, 2017 5:00pm-6:01pm EDT
james comey from providing potentially damaging testimony. here is sarah huckabee sanders. >> the president's power to exert executive privilege is well-established. swifter to facilitate a examination of the facts, president trump will not exert executive privilege regarding james comey's scheduled testimony. alisa: he is scheduled to appear before the senate intelligence committee thursday. president trump today made the case for privatizing the air traffic control system. he says it would improve customer service by reducing costs, wait times, and technology. trumps current systems -- says the current system is stuck painfully in the past. the u.s. supreme court has agreed to take up a major digital privacy issue. it will consider whether police need a warrant to review records from cellphone towers. law enforcement often uses such records to track the location of suspects.
recent rulings have been protective of digital privacy rights. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am alisa parenti. this is bloomberg. "bloomberg technology" is next. ♪ caroline: i am caroline hyde in london. this is "bloomberg technology." coming up, our exclusive interview with apple c.e.o. tim cook. emily chang will speak with him from apple's developers conference later this hour. the u.k. prime minister calls for greater regulation of the internet halloween the terrorist attacks in london. but tech firms are pushing back. fitbit falls to third place in the wearable device market while apple steals the spotlight.
can it make it come like the less come back? apple's worldwide development conference kicked off in san jose, california. we will be speaking with tim cook later for an exclusive interview from the annual event. it is one of apple's biggest events for the year setting the stage for hardware and software that will hit the market over the next 18 months. this year, the company announced updated macbooks and a major overhaul of the operating system and topped it off with something brand-new from the company. the apple director of marketing with the formal announcement. >> it is absolutely beautiful and we call it home pod. yes. [applause] caroline: that is right. apple is going after amazon and google with a new home smart speaker called the home pod.
joining us is cory johnson. and mark gurman. you have been there from the early hours. mark, you have always tantalized us with the latest product that will be unveiled. is the home pod the big announcement today? i think the home pod is definitely the product of the day. it is the first new piece of significant in two or three years since the apple watch was announced in 2014. it goes into the home space and gives them a new have. do you think this will increase apple music subscriptions? cory: it probably will. they tried this about 10 years ago for the same price point and it was a dismal failure. this is an expensive device, more expensive than the competing products from amazon and google. they claim it is a much better speaker.
they claim it will replace all of that stuff. there are a lot of unknowns as to how the products work. people have a lot of questions about how well this works, how much it will work with other platforms like spotify. and that will matter a lot. conference, they did not say anything about a development kit for companies like uber and lyft to develop apps for it. caroline: i'm looking at the announcements and how this feeds into how apple is trying to change its overall business model. i'm going into the bloomberg if you want to tap into your bloomberg. have a look at what we have got. this is apple's segment revenue breakdown. this shows how important the iphone still is. we are talking $137 billion worth in terms of revenue last year. compare that to the next best,
services, $24 billion. how much do these announcements and the focus on where developers can take this feed into how they want to change their business model and not only about the iphone? cory: hardware drives headlines for apple. it is all about the gadgets. that is what the headlines tend to be. the reason people are interested in apple's stuff is not that the hardware is innovative. it is that the software is innovative. that is what this event is about. we had 5300 developers from 75 countries here to find out about the software and how they can develop software for these devices. the devices matter. but the ability to develop for those devices for the programmers to make money is what matters here. i think what you have heard, the consistent theme here was use of artificial intelligence, machine learning, and siri as the
headliner for all of that. and incorporating siri into a lot more stuff whether the home pod or the messenger applications. that was a big part of the focus here, trying to get developers excited about using the ai stuff and siri. caroline: mark, take us from ai to ar. this was one of your big scoops, focusing on augmented reality. how much of a hit did we get on that? >> augmented reality is very interesting because apple did something it normally does not do. it announced augmented reality. it mentioned those words on stage for the first time i believe. this is a hot new area. but they did not announce any products or initiatives related to ar. cory: the development kit was cool. >> but nothing apple branded to inspire developers to do new
things. before they did ai, they introduced siri. with the home devices, they have home kit. we saw the health stuff before the apple watch, the home integration before the home pod. forwe are seeing ar developers before we see a big push from apple. cory: it is interesting. the cutting-edge product is pokemon go, not an apple product but uses the iphone or android phones to propagate that to the world. they used it on stage showing we can make it better. we can help you with the development kit that i thought looked cool. they had too, create an engine to do this. apple says we have our own engine. it is better and you can use it. i'm sure there will be a ton of new apps with the ar integration in the future. caroline: what about wearables?
fitbit has dropped to third place. does there seem to be an upgrade for the operating system for the watch? >> for the second time in two years, they are revamping, redesigning the core of the operating system. last year, they made it easier to navigate. this year, they are putting more attention integrating siri into the watch face. i could lift my wrist and look at it and it will tell me all about my day, what is going on in the future, boarding passes, and whatnot. cory: can you come to an apple event and not wear your apple watch? i do not even own an apple watch. there was not a lot of mention of the airbus. >> the air pods. they could have added enhancements. would add itthey where you can tap to go to the next song. maybe they will the future. caroline: it was a down day on
the stock market. why not more enthusiasm? cory: it is hard to connect the dots. that is why the stock is down today. in terms of the development of apple's business, by announcing products with great fanfare that will not be on the market for a while, it will keep sales through the end of the year. it could be a combination of investors seeing good things and what they announced and concern about short-term results for those product lines that will take headwind knowing replacements are coming down the line. some of it not until december. caroline: great as ever. it has been a long day. thank you so much, cory johnson and mark gurman, live from the wwdc. stay tuned. it is our exclusive with apple c.e.o. steve cook.
that extended interview later this hour. now a story we are watching for you. alphabet crossed a major milestone in the session. shares traded above $1000 a share for the first time ever. giantsis among the tech seeing record-setting gains this year. the stock is up more than 25% in 2017. more tech companies hit all-time highs in the session including microsoft, amazon, and nvidia. prime minister theresa may cause out the tech community after the attacks in london saying the industry should do more to stop the spread of terror online. what comes next and the impact on the election days away. bloomberg is live streaming. .heck us out weekdays this is bloomberg. ♪
caroline: now a story we are watching. if the sprint merger with t-mobile happens, it looks like potential lenders might be stuck on the sidelines. in early discussions, a new potential option has emerged. an all stock deal that would avoid the need for financing. they would let door to come -- deutsche telekom avoid paying a premium for sprint with long-term upside. t-mobile has an enterprise value of more than $80 billion compared to about $70 billion for sprint. social media platforms are under heavy scrutiny following the
terror attacks in london over the weekend. speaking on sunday, prime minister theresa went directly after the tech industry saying it needs to step up its work to fight terror. >> we cannot allow this ideology the safe space it needs to breed. yet that is precisely what the internet and big companies that provide internet-based services provide. we need to work with allied democratic governments to reach international agreements that regulate cyberspace to prevent the spread of extremist and terrorism planning. caroline: tech firms say they already police their platforms and are working to form a common identifyto more easily terrorist posts and fight them for removal. what might be next and how could this affect the u.k. elections? ,e are joined by sasha havlicek c.e.o. of newswhip. great to have you on the show.
explain about the institute or strategic dialogue and whether you feel more regulation is the answer. >> we have been working to combat extremism of all varieties for over a decade now, both off-line and no more and more online. we have done a lot of work with internet companies but also government on this issue. there is a challenge. we see terrorists and extremists deploying professionally online. they have a head start. we have seen little to compete with that message of hatred online. littletw professionalization of the credible voices that can counter the space. in many ways, this is where tech companies can be the most upscaled and support endeavors in this space. there is more they can do. they have admitted that.
they have committed to setting up an industry body to drive not only counter speech in the space and education, but also technological innovation because there is more that can be done to identify and get rid of the most egregious content swiftly. the thing we need to be worried about always is the overstepping of those lines. there is a lot of gray area content, very difficult to identify what in all cases should and should not come down. that expertise often does not sit within the internet companies. i don't think anyone wants them to take on a full editorial role with regard to content. caroline: where do you think the battle at the moment is between tech versus government? do you have a view on the response thus far? >> i think we have seen with these problems have emerged before, the platforms have responded quickly. newswhip tracks the sharing of
different forms of content online and quantifies the data very exactly. what we saw in the u.s. election, a large amount of fake news was spreading online. we saw much less in the french election and even less in the run up to the u.k. election. i think the tech companies do not want elements to come in. they will race to solve those problems through technological means themselves before laws get drafted hopefully and be successful in doing that. that is the strategy we will see here. >> the u.k. government and theresa may is talking tough on this, but i think the u.k. government also would prefer an industry led solution. they have the best wherewithal to drive the technological response. there is no question about that. they're putting pressure on no to make sure the internet companies follow through on the promises they have made. but there is also something to be said for engaging -- for
letting certain types of accounts stay up online. we do a lot of work monitoring and identifying extremists prior to the law-enforcement phase, prior to them crossing the threshold to terrorism. there are ways in which we can engage further upstream those sorts of individuals and make a change in their attitudes and behavior. the issue is whether we drive them underground to fire -- too far. there are constituencies we want to watch and engage with successfully. those engagements have to be done carefully. they have to be done by people with an understanding of the issues. we work a lot with networks of former extremists to reach out to those people online, credible voices within communities use peer-to-peer engagements. internet companies have been followed behind the sort of activities. facebook has lost a major
initiative to support counterspace and so has google at a special -- especially work on digital literacy and citizenship. how do we get young people understanding how quickly they can fall into the rabbit hole of extremist communications online. caroline: what you do is monitor throughout the u.s., the u.k., the french election, you have seen changes. what about the effects ahead of the u.k. election? do you monitor currently what we are seeing in terms of internet dialogue and how this is affected by terrorist activity? that's what we are monitoring and focused on is what content is being shared. it is a strong indicator of what people are interested in and talking about. election call the u.k. -- we are seeing a lot of sharing of articles in a
reasonable amount of sharing a policy-focused stories. ort are about foxhunting sales of arms to dictatorships. these are the things being talked about. there is a good deal of engagement on the statements made by each of the party leaders following the terror attacks in manchester. there was not any big subsequent move of the narrative after that. i think conservatives are seeing an angle for attack here on labor. we have not seen a huge pickup of engagement. the most engaged stories in the run-up to the election are about foxhunting. caroline: which amazes me. very quickly. are you optimistic we can see some sort of internet-based internal help to help prevent the spread of extremism online? >> i agree there will always be
a gray zone. like twitter removing extreme accounts. facebook has designed itself as a hostile zone for terrorism. there will always be the gray zone. at what point does supporting a political cause in the middle east bleed into expressing an extreme view? this discussion is not going to go away. >> which is why i would say it has to be a partnership between the tech companies and civil society. that is the partnership needed to respond to this challenge properly. caroline: thank you very much. it was wonderful having you both join us. thanks to sasha havlicek and in new york paul quigley, c.e.o. of newswhip. coming up later in the hour, our exclusive interview with tim
cook from the worldwide developers conference. emily chang is sitting down with him this moment. we will bring you the conversation as soon as it wraps up. a reminder of our new interactive tv function. you can find it at tv on the bloomberg. you can watch an interview or send our producers a message. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪
return trips before they were retired in 2011. there brings elon musk one step closer to reusing spacecraft. now to a stock we are watching. shares of snap fell after j.p. morgan lowered the price target by 10%. based in part on fewer people flocking to the platform. j.p. morgan says users are not expected to join snapchat as fast as previously expected. harvard university has withdrawn the acceptance of 10 incoming freshman because of a social media message. an offensived offshoot of the meeting group. harvard reserves the right to withdraw admission if a student engages in question will -- questionable behavior. we continue our coverage of the apple developers
to target pedestrians. they are designed to stop copycat attacks of what british prime minister theresa may cause a new trend in terrorist tactics. police will not say how many bridges will get the extra layer of security. the decision to sever diplomatic ties with qatar should not have impact on u.s. military operations. central command says there are no plans to make changes. central command and its 10,000 u.s. troops are based in qatar. the country is accused qatar of supporting terrorism. the first ever united nations conference on oceans has opened on a luminous note. the secretary-general says oceans are under threat as never before. he says plastic garbage in the waters will outweigh fish by 2050 if nothing is done. environmentalists and are presented as from 200 countries are attending the conference. global news 24 hours a day.
i am alisa parenti and this is bloomberg. it is just after 5:30 p.m. monday and washington, d.c. 7:30 tuesday morning in sydney. we are joined by paul allen with a look at the markets. good morning. >> good morning. we see futures pointing lower this morning, only down about point for -- four points at the moment is the iron or price continues to stabilize around $54 per ton. the board of australia holds its meeting today. the cash rate expected to rick -- remain on hold at 1.5%. we are seeing inflation creep back into the target. employment in australia's strong on the surface although there is an issue with an implement. wages growth is still weak from a growth in prices. bids are rising the r.b.i. --
rba may cut later in 2017. in japan, futures slightly weaker out of japan. we are waiting for labor and cash earnings for april. .3%cting modest growth at to reverse the kinds in march -- declines in march. south korea is closed for a public holiday. u.s. secretary of state rex tillerson is visiting new zealand. i am paul allen in sydney. more from "bloomberg technology" next. ♪ ♪ caroline: this is "bloomberg technology." i am caroline hyde in london. we are diving back into our top story of the day. that is apple's worldwide
developers conference. emily chang is currently speaking with tim cook in an exclusive interview from the annual event. cook spoke about one of the major announcements, the apple home pod. >> apple is a company that deeply cares about music and wants to deliver a great audio experience in the home. we feel like we reinvented it in the portable player area and we think we can reinvent it in the home as well. caroline: the home pod is apple's answer to the amazon echo and google home. emily asked about competition heating up and if apple is late to the game. >> for us, it is not about being first. it is about being the best in giving the user and express that delights them every time. we do not let that in patients -- impatience result in shipping something not great. caroline: more of that exclusive interview ahead. that is not all apple announced.
it laid out its plans for the ios 11. the next major update will aim to improve on core technologies that power the operating system and introduce new features. wwdc, bob from o'donnell, friend of the show, and the asymco founder. thank you for joining me. what stood out for you looking at the new operating system in particular? what about the software update? >> there were a lot of nice software updates we saw on ios 11, particularly on the ipad. we saw a lot of -- apple put a lot of love toward the ipad. it brought a number of capabilities people have been asking about for years, including a filesystem which seems simple but is a very big deal for a lot of ipad people.
that was important. the imaging capabilities were important. themost exciting thing is ar kit that will enable ios applications to do augmented reality. they had impressive demonstrations. it looks like cool technology. we will be anxious to see what developers can do with that. caroline: talking up asymco's work, you put out an article in january saying how apple is set to earn $1 trillion in revenue from the ios ecosystem by the middle of this year. is this going to be set on that particular direction you think? >> absolutely. we have new numbers that confirm the trajectory we have seen already growing for the ecosystem. not only do we have 180 billion downloads, we also have this , $70 billion paid to
developers which we can now calculate that about $100 billion is what consumers have been spending. on top of that come you have the apps that are free but enable huge ecosystems. ios are all built on top of and their economies depend on ios to a large extent. very much assists with that strategy and trajectory. caroline: bob, i want to dig into some of the other niche areas within the operating system that were announced. a lot of work on ai. they have been unveiling the new rival to amazon's echo. what about siri? will we find it easy to talk to these new ai devices unleashed by apple? >> i think so. i think the big news with siri
is getting lost a little bit because what i see interesting around siri is this idea of what i call contextual intelligence. in other words, you want to make it be aware of where you are, what you are doing, and make recommendations based off that. some of those things are subtle. we saw apple introduce a number of these things. they leverage machine learning and ai. they generally seem to be doing that. one of the big things i think was missed was the fact they are now doing a lot of this learning on the device. that is a big deal. a couple of years ago, apple started talking about doing some of this and people wrote it off like there is no way can do it because the general thinking at the time was that you need huge data centers to do this work. now we have realized you can do that on the device. that is a big step forward. all of a sudden, it makes apple look pretty smart when they talk about doing the device-based
app. >> i tweeted and said siri is going to get to know you, track you, and be smart about you. but apple themselves do not make that claim. siri is your friend and confidant. but apple is completely oblivious. that is the distinction in their strategy versus google that keeps the knowledge centralized. >> exactly. the trip will be how well siri works on the speaker and in general. >> some will saving centralized makes you smarter. that is the that we are seeing layout, whether apple things having local intelligence versus central intelligence, that is the really big question here. caroline: the big question for me is whether this shifts the business model anytime soon. i'm going to show the chart again on the bloomberg. 8254.n type in the number i'm looking at how much revenue
is dominated by the iphone. $24 billion. does this push up where we see services revenue going? >> i think it does to some degree, especially the speaker. they will focus on making it part of apple music, really integrating it. they want to drive more people to using apple music. i think siri is going to start to become more of a platform and we will start to see services layered on top of that. >> $100 billion a year is the run rate. this is a bogey. the apple can get there. remember the iphone gets huge margins, higher than anyone else by far and still consistently higher for many years so far. the reason it is so high is because of everything else we talk about as being insignificant. all those things add up and make
the iphone franchise a valuable. we point at it and say where is the hardware when it is the software driving the ecosystem and that loyalty and satisfaction we are seeing. the numbers are not telling the whole story. aboutne: horace, what mois rival to paypal's vend with apple pay starting to galvanize itself? think it might be an accidental victim. apple is not out to get people. i think it is trying to make the experience better and bring peer-to-peer payment within its platform. it is trying to get money from this. are they a bank by default? they may be outsourcing some of that. they want to make a great experience. it is the same thing with apple pay. some said it would be a monster in terms of revenue because apple wants to be a bank, but
that is not their business model. i think it is one of those that are building blocks. >> exactly. i don't think it will be a huge moneymaker for them. it is a convenience. it is something people can do within the messaging app. this is what we see with messaging platforms in china and other places. apple is expanding messaging to be able to do more things. we are seeing them build these mini platforms within the platform. messaging be one and siri another. i think that is what we can expect from the moving forward. caroline: we will see who wins out when it comes to keeping us addicted to that particular platform. bob o'donnell, great to have you. edison cofounder, horace dediu, great to have you join us from debbie debbie d.c.. ahead of the shareholder meeting, tesla reach out via
twitter. the company tweeted questions to answer the shareholder meeting tomorrow. there were a few lighthearted queries. one user asked for the best wine after a successful shareholders meeting. elon musk answered california cabinet -- cabernet. ng just sat down with tim cook. more ahead. this is bloomberg. >> think he did listen to me. i think he decided wrong. and in it is not good the best interests of the united states. ♪
>> the councils and committees to be terribly productive. about not wanting to advise on something where i or we had could help a point of view that should be heard. and so, i am doing the latter. i cannot imagine a situation where i would not because i think it is in the best interest of america to do it and i am first and foremost an american. caroline: that was tim cook on why he did not join trump's business council. we are staying on apple and our exclusive interview with tim cook. you have been writing plenty of articles today. one is talking about the profit margins that are golden
handcuffs for the company and the company's financial success is holding it back. talk about why they are taking a leaf out of amazon's book and why that may be worrying for investors. >> the thing that worries me is apple has traditionally in the last few years start to these margin targets of about 38% to 40% of gross profit, which is profit -- sorry, revenue after they pay for the cost to produce the product. that is a pretty fat profit margin for a company in hardware and maybe any tech company. the thing that worries me is that by maximizing gross margins and other kinds of profits, is apple missing out on opportunities to do some experiments where maybe they can sell hardware at or below cost as amazon does to get more people to use its other technologies, whether apple music or to download more apps
or use apple video services or itunes? fornder if maximizing hardware profits is hurting apple in the long run. caroline: this is where we are starting to see a higher price point when you look at the home pod. amazon and google are much cheaper. do you have a sense of how much these will fly off the shelves? is anmes price point attraction because you feel it is a luxurious product. >> apple is no stranger to charging premium prices for products. particularly in the iphone line, apple is no longer a premium product. the $700 or more that apple charges for iphones is pretty much in line with what other high-end smartphones cost these days. that has also been true even for some of their newer product lines. apple is no longer a premium product. but you are right. the home pod speaker is at a
premium to devices like amazon echo. apple pointed out today if you look at the price of a high-end speaker, non-smart speakers for the home, those are significantly more money than what apple is charging so it is trying to thread -- tried this line between the cost of most home speakers and the cost of the smart speakers meant to be gateway to google and amazon technologies. do you see apple having to follow amazon's lead? do you think it answers the question set by your other great article, that now it should not be missing the future as you thought? >> my concern on that point is if you look at where technology is going, it is increasingly the case that the future is being dictated by smart software, artificial intelligence, and other kinds of technologies sifting data and making
decisions from reams of data, whether that is driving a car without a human driver or giving companies decisions to fix a factory line before it breaks down. apple has been traditionally weak in those categories of software and artificial intelligence. the worry is all the things it is doing now are not necessarily fixes to future-proof the company for this kind of software driven future. caroline: perhaps that is why the share price did not move much today. >> it could be. a lot of the things apple --ounced today refinements were refinements. caroline: the home pod was really the only new thing. thank you for your analysis. the biggest video game of the year is just a week away. one company says its gaming system is the one to beat. sony has announced it sold
almost 60 million playstation 4 consoles since its launch in 2013 with one million playstation vr headset sold since the 2016 launch. microsoft longer reveals sales but recent estimates say sales could be below 13 million. the nintendo switch is too new to compare about -- but about 14 million new wii consoles have been sold since 2012. coming up, we bring you more of our exclusive interview with and his thoughts on how to reinvent the connected speaker. that is next. this is bloomberg. ♪
bloomberg has been live at the event in san jose, california. emily chang just wrapped up an exclusive interview with tim cook and joins us now from california. amazing conversation. talk us through some of the highlights. emily: thanks so much. just finished a wide-ranging interview with tim cook. we are starting to get a sound out for you now. we started on the newest hardware of the day. that is the home pod. he says this is something apple has been working for four years on, which means they started working on this before the amazon echo even came out. you will notice apple is focusing on how this can reinvent music in the home. not all of the other potential use cases. i started off by asking why anyone should by this over amazon echo or google home. >> apple is a company that deeply cares about music and wants to deliver a great audio experience in the home. we feel like we reinvented it in the portable player area and we
think we can reinvent it in the home as well. able to make ae phone call with this device? will i be able to order groceries? he said not to think about it that way yet, to focus on the music use case but as soon that is just the beginning. in terms of why did it take so long, the fact that so many people are now saying finally? take a listen to what he had to say. >> for us, it is not about being first. it is about being the best and giving the user an experience that delights them every time. thato, we do not let inpatience result in shipping something just not great. have: that is a refrain we heard from apple before when it comes to other new products. we also wanted to talk about tim cook's relationship with donald trump. tim cook called the president
last week when there was some confusion about whether or not president trump would be withdrawing the united states from the paris accord. he urged the president to remain part of this landmark agreement and trump made a different decision. i asked what that means for cook's relationship with the president. take a listen. >> i think he did listen to me. he did not decide what i wanted for him to decide. i think he decided wrong. i think it is not good, not in the best interests of the united states what he decided. asked why it is worth continuing to work with this administration. tim cook made it clear he believes if you have an opportunity to work with the administration to help the american people, you take that opportunity. you do not walk away from the table. he also made a point to mention he did not join the president's council by choice. take a listen to why. >> the councils and committees
to be terribly productive. but it was not about not wanting to advise on something where i or had ae could help point of view that should be heard. and so, i am doing the latter. i cannot imagine a station where i would not because i think it is in the best interest of america to do it. and i am first and foremost an american. more of my exclusive interview with tim cook will be airing all day long on bloomberg television. do not miss it. we will have a full roundup tomorrow on "bloomberg technology." that is all today. ♪
♪ announcer: from our studios in new york city, this is "charlie rose." charlie: donald trump decision to withdraw from the paris climate agreement has provoked a negative reaction overseas and at home. joining me from washington to talk about the president is the chief correspondent for the "washington post." welcome to our program. tell me why the president felt compelled to do this and let's grant him that perhaps he thought it was in the national interest to do this. perhaps he did not believe the accord was the best that could be had. let's assume that is