tv Best of Bloomberg Technology Bloomberg July 29, 2017 6:00am-7:00am EDT
distance of apples top spot. amazon shares dipped thursday after they reported disappointing financial guidance, especially a potential loss of a third order. the earnings per share missed the low analyst estimates. amazon is preparing to step up competition with walmart and cloud computing challenger. we looked at the numbers. >> this is a company that disinvesting. there is a cost to all that free video. emily: where are the expenses? >> its video. they are building fulfillment centers closer to cities. if they are making all these great shows like manner the high castle. that costs money.
in thisk is down 2% are is an on slap of will shareholder base. there is this deal of the company. emily: shares are down 3% area -- 3%. is number why bezos one or now he hasn't. the point is, they are able to take long-term investments in infrastructure and turned that into profits. as they told up these warehouses, tech elegies -- technologies for stores without the aluminum, they will be able to license these things. that is a smart long-term perspective. it that's a people are buying into. emily: what about whole foods? are we getting any more clarity and how this acquisition will play out? how will this be integrated into the empire?
>> the deal has not closed yet. the cfo declined to comment on it or it it has not gotten past regulatory review. we don't know if there will be regulatory scrutiny. they are not talking about that. grocery is a major avenue for amazon, not just the whole food purchased but they just entered singapore with prime now. in the coming weeks and months we will no more. emily: i'm interested in how the dynamics are changing with nike and sears selling directly to amazon. >> they have this infrastructure capability to deliver goods in another way. they are becoming a logistics company as well. they are building the logistics they need to do groceries. bezos loves solving problems.
they are going to take that ,bility and take those skills license them and figure out ways to make money for themselves and for other people as well. emily: we will see how investors respond. is the confidence and jeff asus deserved? bezos deserved? >> he called his shot at how he was going to run the company. are enteringhey into investment cycles were they will spend a lot of money. they operate the company with a lot of discipline. they give you these broad estimates, but they always had those estimates. if you do that enough times, investors trust you. if he has earned the trust. emily: will this accrue any anti-trust scrutiny? >> that's a fair question. out theseolling
infrastructure capabilities and they have a larger influence. in the current environment with his ownership of the washington post and the way donald trump views that, there is an incentive to say maybe we should look a little that direction. next to eachat other at that meeting at the white house. of they are not best friends. measure, thisonal should pass scrutiny. topsy-turvy political environment. this could get scrutiny just because jeff bezos is not the most popular guy in washington. emily: there is speculation about the next big that. -- that. >> let's not forget what they are doing with computing. there is an interesting play when we look at the per spec to vote they were never able to do something from an operating per spec. they wanted to compete against
google and apple. now they are coming in from the side with this voice-based computing thing. this opens up lots of different avenues. it's across all of those pot forms. -- what forms. emily: they are the leader on the cloud. we some progress at microsoft. the pie is getting paid or. do they have to worry about the competitive threat? >> the pie is getting so much larger. the challenges when they enter into the price wars and it depresses the profitability. right now, we are not seeing that and the businesses looking healthy. they are hiring a lot of people. this is a very hotly contested space. emily: good for your portfolio? >> in the long run, i think so or in -- i think so. in other earnings news,
twitter did not attract more users in the second order. they had been looking for evidence they are on a path of sustainable long-term growth. revenue fell and the net loss widened, affected by a write-down in the music streaming service soundcloud. facebook turned out cashes in expected growth fueled by strengthen mobile video ads. billion have over 2 monthly active users and driving revenue at a faster pace and other tech giants. they are investing in original content. the first shows will come online in august. >> we see a lot of content engagement shifting to mobile. our goal is to be a plat warm for content providers to find their audience. we are doing some early investing. we are giving more episodic
doing on facebook. we think that is important. we are making that investment. we have content providers creating that content and providing their audience. alphabet was out with earnings this week. revenue came in at $26 billion, up 21% year over year. costs dropped 23%. they had a fine from a european competition commission. she told me it is so early in our analysis that it's an ongoing legal matter. they have not decided if they will appeal. >> i think the reason the stock is down is because of the
acquisition costs. they have been warning us that as they shift away from the mobile device and programs and they are on an apple iphone and we see ads within a nap, days -- those may be served by google. calls,e making sales ring in those ads. they are selling them to apple. it's more expensive to a wire that traffic. costs had been rising. emily: this is more about traffic acquisition costs? >> i think that's what it is. they said they are going to be more mobile and it's going to cost more. emily: what is your take? you really singled out the strength in mobile search as
well as youtube in terms of driving momentum. >> mobile is the big driver here. that's the headline. that's why you see increases in clips and decreases in costs per click. that's been a big driver in the big storyline for google for some time. emily: what about what's going on with youtube? we talked about the ad apocalypse. it there was an investigation into extremist contest -- context. it seems like those advertisers have returned. she reiterated that across the site, that benefited mobile search and youtube are in it they take seriously the issue and we are protecting ecosystem. >> a lot of this has been a lot
of toys. they like the advertising. they like the traffic google is giving them in terms of clicks. result actually see the as it runs. advertisers like that. advertiserst that it wasads a year ago, good news for google because they have fixed the problems that may have been there. i do know how big these at problems will he were. it looks like they are back. it looks like none of them stayed away for good. it might make them look at her for google -- better for google. emily: there are investigations in the eu, we had this big fine. google is trying to decide if they are owing to appeal. how concerned are you about
future investigations? >> from an advertiser perspective, there is a lot of concern. youtube scandal earlier in the year and now the ruling from the eu from the competitive commission does not help and advertisers stomach when going to investing on google. how'd you know that you're in ad is not owing to get played someplace you don't want to be seen? how is that not being skewed against you? there are some issues. i agree that this is a good thing for google in the long run. identifys been able to what they need to do going forward and what they need to work on to build trust with our advertising partners. later on, the war of
lcdica does not have an plant to produce a complicated system. we are going to change that. it starts today with this investment in wisconsin. emily: meg whitman is stepping down. replaced and remain the ceo of hp enterprise. the news comes on the heels of our report that she is on the shortlist of candidates to will the ceo spot at bloomberg. byy will name a new ceo november. we discussed this with eric newcomer who covers uber. someone i long been thought was a possible candidate. she's been advising travis.
graves.lose to ryan emily: she's an early investor. >> she has been in the mix. she has the experience running a tech company. it's not a guarantee that she is going to become the ceo, she is in the mix. togetheris to get it before labor day. emily: david, what do you think of meg whitman? >> i was just thinking there is an interesting analogy between what she really did wonderfully well, which was run ebay and uber. they are both marketplaces. asked with the kind of company she could run better than she has been able to run hp. is might say she
generationally too old for this sort of thing. she is a veteran. she brings a lot of the right characteristics to the job. i am relatively optimistic that she would be a strong candidate at a minimum. take: she is unlikely to the job and may not he a top contender. what is your reaction? >> she is a top contender. she is going to be here until the job is done, which is super vague. this one.e on coming up, capital funds get bigger. we will chat about the record-setting latest bond. a competition in mentored reality eats up. how they plan to carve out a
emily: they close their latest bond that $800 million. it's the largest in their 30 year history. cash gives money that would be raised on the public market area we spoke with the general partner. maha: our firm is a diversified bond. about 40% of what we do is health care and 60% is tech. ofhave had an incredible run exits. we feel like there are a lot of areas. emily: you have been there for more than a decade area what do you think of these comparisons? maha: we are in heady times
right now. there are so many companies amassing an incredible amount of revenue traction. i don't see that ending. i don't see a cliff like we saw in 2000. there is a ton of momentum and money flowing into the system. had 30 acquisitions. that is three times the average. that, somedition to of our companies seven exiting asked her than normal. our average time to exit has been less than four years. because we pick a franchise and go toward investing. areas we go very deep in and we mine them in terms of networking. that is the secret sauce. emily: do you get the sense a
company would take 10 years to go public or exit, would you stay away from that? maha: we are building companies for the long-term. because we are taking that approach, we are on the pulse of what they want and are thinking about. that causes companies to exit faster than they otherwise would. some take 15 years and that's fine too. emily: what areas are there big opportunities? very hottax is still for us. we have money in real estate and insurance. we spend a lot of time in cloud. of we have a few gaming deals. it's very disciplined, our approach to taking index funds. emily: you are celebrating 30 years as a vc. you have three female general partners are in a -- partners.
i'm curious how that changes the invest -- environment inside the firm. maha: it has been such an incredible, i am incredibly fortunate to be at the table. the conversations we feel are a lot more inclusive. we feel it we are reflective of what the true entrepreneurial pool looks like it -- like. they are surrounded by people with similar experiences. they are much more comfortable. emily: i know you've been following the sexual harassment story. there is an investigation at uber. are you surprised by this? maha: i'm not surprised. i'm surprised at the nature of it, i'm not surprised it's happening. if there is a positive spin on
this, the sexual harassment has happened. i'm no -- sure there are more cards to fall. it has woken up to the need of diversity inclusion. need to be bringing up women entrepreneurs, people with therse backgrounds into investing world so they feel welcome. emily: i know everybody is calling everybody. maha: i'm getting a lot of calls and spending an hour or two a day either talking with entrepreneurs, i am on the board that is taking a very serious look at what's going on and taking about how to approach the topic. we are talking with partners of ours. it is top of mind. we are talking about the fact that it is happening, what we motions intoe put
term sheets, can we get a more diverse pool of investments? notions being talked about right now. my hope is we can come together and make this a more inclusive environment for venture and spillover. maha: i know that entrepreneurs come to you. have you ever found where you are a co-investor where there is bad behavior alleged against that person? fortunateve been very for that to not be the case. i see female entrepreneurs, each of them have told me a bad story. this is been happening for 17 years. effort into put making it stop. emily: what are those efforts? shouldn't everyone just be
decent? maha: that's an incredibly low bar. before, id this believe that a huge part of this bad behavior stops when you have females and minorities at the investing table. stuff like that will not happen. behavior will be checked. from a social psychology standpoint, i want to invest in people that look like me. 40% at my firm are female. that's not an accident. it is not something we did purposefully. it just happened. the average is more like 6%. we have reached a tipping point. emily: she is the general partner at canaan partners. thom and dive into
♪ emiliy: welcome back to "best of bloomberg technology." i'm emily chang. than inspected second quarter revenue. that is the 6% year-over-year increase. the forecasts missed estimates in the company's stock sank to its lowest level in at least a year. studioham joined us in for an exquisite interview. : the important thing to realize as traffic is growing at a rapid pace is we have lost some share to do-it-yourself efforts. outside of that, hour traffic growth is bigger than the internet as a whole. we are gaining share.
i think the important thing to result isfrom the q2 our performance and security business, our web division customers, the majority of our revenue. a very profitable business growing at 16% year-over-year. our security business now almost half $1 billion. we expect that to be $1 billion over the next four or five years growing at 34%. emiliy: revenue is still strong, but slowing down. is that because you past the early adopter stage? tom: growing up 34% is pretty good in your the largest cloud security provider. there is strong growth ahead, enough we are confident we can make a $1 billion of business. just tell launching our first to enterprise security products. we think in the long run they had even more runway than the existing web security business,. which has been very successful
emily: when will we see new products contributed to growth? tom: i think next year. so far they are on a track record that exceeds what we did in the first year with web security products. obviously see what is happening with streaming services, some of these new services. can you give us any color on how quickly these services are being adopted? tom: that is a great question. we deliver for a lot of those companies. is the majority of traffic on our platform and growing at a good clip. that makes us optimistic about the future of our media business. the question really is, how fast with the adoption be? everyone thinks over a period of years a majority or large majority of the watching will be on the internet. emily: that was tom leighton.
reality is augmented becoming a major trend in coming years, but it is not just tech giants making a play. claims it hasipar more than 99% accuracy and to recognize 370,000 public figures. caroline hyde bottom with the ceo and asked about the business applications of its latest features. >> the facial recognition in our app, it is fun, social. we want to learn from the experience. they key for us is the accuracy and the recognition. our facial recognition has a 99.67% accuracy rate. that, you can take that from our app and use it in a whole host of sectors. identity management and facial
recognition is a way to be able to transact. when you'reess trying to find your car and it recognizes you as an employee. so many different smart networking. 5000t a conferences with to 10,000 people trying to figure out who is who. you can just scan a photograph and get a information. >> security? to be able toies scan a picture and no details about them. how does that scale? danny: security is a key area. i think like everything you have to embrace the technology. acknowledge facial recognition gives you the ability to find where the bad guys are, is a very positive development. think about the person who is in a foreign city and has nothing on them.
the ability of somebody else to comedy facial recognition, to find nationality, to find their closes embassy, the next it c - of kin. there is so much value this can bring. blippar now? five years ago is about branding and exciting ways of using it and getting access. what do you want to stand for now? danny: we are a technology company that specializes in augmented reality. is a showcase of the technology. we made a very clear decision to be able to scale, you need to be good at computer vision. when you have a perfect marriage with augmented reality and overlaying technology, you have
aierfect technology to allow to scale. if that happens within our app, the technology we have built can be taken outside the app so other companies can capitalize in what we have done a computer vision. >> what is it mean in terms of money? are you looking towards profitability? how do you make sure this is a revenue driver as well? danny: we already generate revenue from the brand we work with. we take a long-term view which is we are building something ambitious. we are indexing the entire world. he the best engineers in the field. we have a lot of those here in london and on the west coast in the u.s. fundamentally we want to become a profitable company the
future. along the way there is significant milestones. >> are you going to be fund-raising anytime soon. however investors reacted thus far? danny: we have raised just over $100 million over the last five years. we have incredibly supportive shareholders who are comfortable with the progress we're making. who is to say what happens in the future. right now feeling good about where we are going. pressre is talk in the you are brighter cash, etc. but it sounds like a heavily investing area you are in. -- is your board board comes of all the progress you are making? if the answers is yes, that's
exactly what you want to be. emily: that was danny lopez speaking with caroline hyde. coming up, samsung is closing in on apple's spot is the most profitable business in the world despite turmoil in the company. what is boosting its ascent, next. all episodes of bloomberg technology are live streaming online. this is bloomberg. ♪
used by 70 billion users a month. 90. app visits reached million. it may struggle to broaden its appeal beyond women into same user growth. amazon, and/or and facebook continue to see visitor growth challenges in june. samsung has had a rough 12 months, from its exploding smartphones to its heir apparent on trial for corruption. the company has been making positive strides. in his earning reports that enough increases in sales and operating profits field mainly by the memory chip division. that growth is the company closing in on apple's spot is most profitable business in the world. global head of tech coverage traveled to seoul to look in the south korean conglomerate and detail the turmoil at the company in the latest edition of bloomberg businessweek. >> first of all, samsung is great. they collaborated on the story,
brought us in. but probably talk to six or seven senior executives. without a look at the new chip facility, which i'm about to tell you about. you have, it is poised to be most profitable company in the world,. overtaking apple we will see when apple reports. in the largest semiconductor maker in the world, overtaking intel. with this sort of crisis around on company, its chairman trial for corruption, the note 7 debacle last year, they are executing well. emily: we had a question if they were ever be able to recover. here now today, talk to us about the trial and how that's impacting the company. bread: you have done it -- brad : it's a consortium of 60 to 70 private companies. there is a founding family that hovers above it all, the coordinating group that is been
disbanded. the leaders have been charismatic figureheads dipping into make major decisions, acquisitions, major investments. in south korea this is a political situation, to turn the tide of public opinion against the day companies like samsung. emily: which of the south korean conglomerate. what is the likelihood he will emerge from this unscathed? they have not produced a smoking gun. the allegation is they persuaded the government to put pressure on the shareholder group's pension fund to approve a samsung murder to shore up the family control of the conglomerate. if there was a quid pro quo, it was an unspoken one. they are not produced a smoking gun. i think he probably gets out of this ordeal. we will find out in the next couple of weeks. there is precedent for the heads of these companies to spend time in prison. south korea is a very conflicted relationship between government, the people, in these large
companies that feel its economy. emily: for all the things they are doing well, there was this big thing they have not tackled which is software, which may be the primary reason people don't buy samsung phones. brad: let's do a contrast. in two years to have spot a massive semiconductor fabrication facility. hastell as an work -- intel an working in arizona for five plus years and trump has tried to put pressure on them to complete it. militaries ofs workers the at these things up and running. it is a different set of skills, the militaristic discipline. they are releasing this personal assistant around the world right now, their siri and there has been criticism about how they presented it. and how answers queries. this is something samsung has to
master. there is bright spots with samsung pay, a lot of failures. their operating system never caught on. emily: what was your impression from within the company having spoken to six or so executives? brad: they remarkably recovered from the note 7 debacle. they have released the note 7 in south korea. what company would do that? the brand literally went up in flames. the note 8 is coming out soon. the galaxy s8 is out with good reviews. my impression of relentlessness. they deploy so many resources. they are so disciplined and efficient that they are tough to beat. particularly on the manufacturing side, this area of strength that an apple or google cannot capture. emily: what is it me for apple given iphone 8 expected release in september?
brad: they are frenemies. samsung memory chips are an apple products. apple has a reliance on samsung, even at the high end of the smartphone market they compete. emily: they are trying to change that by designing their own chips? brad: right, for they don't make them. samsung makes the chips. apple can't get out of its reliance on samsung because samsung went and tortured all the competition. it is hard for apple to go and ween itself off samsung. samsung can rely on apple and its business to basically subsidize the smartphone business it competes with. --ly: bloomberg's brad onlineis pushing into lending and other p2p financial services. their head of consumer lending tells bloomberg that china's pie
is big enough for them. >> over the past few years we have noticed a lot of problems in this industry. the industry needs some revelation in place to enforce the activities and behaviors, and to make the industry developed in a good way. >> is it important to innovate before those regulations stifle innovation? because difficult space to it needs more innovate. a lot ofme time, players in the market are not self-contained. >> self regulated. >> regulated. regulation,nt and
there are rules that need to be in place to make sure everything is fine. >> what is the biggest risk to you? >> risk management. people, the debt ratio is so high. some of them may have trouble to pay back. the other side is the financing side. over the past few months we have increase so huge and squeezed our profits. risks i have seen. >> your chairman has talked about the troubles xiaomi has had of late, losing market share and sales coming down. he talked about maybe the grew a little -- maybe the company grew a little too fast. are you late to the game? >> i would not say it is late. it is just timing to extend our
business into this space. we have over 200 million phone users. iot devicesion connected. to you at a disadvantage because you don't have the nearly one billion users that we chat has, for the multi- platforms that alibaba has? >> the chinese market is huge enough. as i see it, we have enough space to grow. we have so huge monsters, competitors in the market. >>? monsters >> i take it back>>. they players. probably still have. space to grow emily: that was -- of's head offe
♪ is at risk of losing another big chunk of the global market. grab raised $2 billion. the company says that expect another $500 million from new and existing backers. the move is just the latest hurdle for uber the struggles to right the ship, the series of scandals. it is the battle of the tech titans of the future of artificial intelligence. in one corner, elon musk morning
is a warning ai potentially existential threat to the human race. mark zuckerberg says he is optimistic about the technology and thinks musk's gives a scenario is "pretty responsible." mark zuckerberg: i'm really optimistic. i think people who are naysayers and try to drum up these doomsday scenarios -- i don't understand it. it's really negative and assemblies it's pretty responsible. aithe next five to 10 years, will deliver some improvements on the quality of our lives. musk responded on twitter, saying zuckerberg's understanding is limited. seat.k a ringside
elon, for the last couple of years has been beating the drum about how afraid we should be about the eventual takeover of the human race by the robots. was a couple of weeks ago where he spoke at a conference of governors and said we need to be very proactive about the regulation of artificial intelligence before it is too late. most regulation in the government is wants something bad happens and you react to it. he says by the time something bad happens in terms of ai taking over it will be too late. emily: zuckerberg says we are already on this path and i think ai can be helpful. the future does not look as dramatic to him as it does to elon. cory: when facebook looks at machine learning, they are trying to within the realm of facebook come up with faster answers to the things people are
discussing. gets you closer and closer to services were people can spend money on facebook or use facebook messenger in particular as a forum for making decisions and doing a lot of things. i think when zuckerberg , you should respect technology to come from my company to be kind and benign. that these are people that all kinds of advisors and people -- these are not two knuckleheads sitting on the couch on twitter. mark zuckerberg was to put out an image of technology friendly, technology is your friend, facebook is your friend, love us. elon musk once everyone to think i'm a visionary genius. loan the money so i can build electric cars in spaceships. emily: elon says i know more than the rest of you about this. cory: is definitely saying i know more about this.
emily: does he have a point? sarah: at the same time zuckerberg is known to stop progress just out of fear. there are so many things to fear about facebook given their data to this nebulous organization. you are right. mark is trying to humanize it. he is meeting people around the country and trying to be unthreatening and approachable. cory: mark zuckerberg's business model for his company is to get very intrusive information about people and put it out in a friendly way. it is not about sharing information. people provide information. facebook is trying to use it and put it out in a nice way. elon musk says i'm smarter than you, i can see the future and you can't. give me your money. emily: this is not the first time they have sparred in public. sarah: zuckerberg is the going out and doing his tour of the
country, trying to relate to people. it is so rare he says something negative about somebody else topically, let alone a mobile. -- mogul. the last time this happened was in a very expensive disaster occurred. there was a rocket that supposed to take a satellite for facebook into space to spread internet access to under served population. rocket blew up on the launchpad. zuckerberg was so disappointed he wrote a public post saying he was disappointed in spacex specifically. emily: that was sarah frier and cory johnson. that is it for this edition of "best of bloomberg technology." we will bring you the latest in tech throughout the week. tune in at 5:00 p.m. in new york and 2:00 p.m. in san francisco. all episodes are live streaming on twitter. check us out at bloomberg tech