tv Bloomberg Technology Bloomberg October 11, 2017 11:00pm-12:00am EDT
♪ alisa: i'm alisa parenti from washington, and you are watching "bloomberg technology." let's start with a check of "first word news." president trump is expected to try to sell his tax plan in pennsylvania. he will say the typical american household would get a $4000 pay raise from the planned legislation. trump's own economic advisor has said this benefit would materialize over four years or on an annual basis would be closer to $500. you can watch the speech right here at 5:45 p.m. new york time here it -- new york time. president and mrs. trump welcomed the canadian prime minister and his wife at the white house today. the meeting comes at the start
of a new round of nafta talks. president trump has threatened to withdraw from the accord unless the u.s. gets a better deal. house speaker paul ryan is taking a hands-off approach in the escalating feud between president trump and tennessee republican senator bob corker. ryan was questioned today about the war of words between the two in recent days. speaker ryan: i think it's just talk it out amongst yourselves. my advice is for these two gentlemen to sit down and talk through their issues. i think that's the best way to get things done. >> global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. i'm alisa parenti. "bloomberg technology" is next. ♪
cory: i'm cory johnson, in for emily chang. this is "bloomberg technology." more legal problems at uber, including a criminal to previouslyand undisclosed probes by the justice department. plus, amazon and microsoft taking the lead. we will hear from top executives at each firm. japanese billionaire and the founder of softbank, his first break and how he closed the investment of a lifetime with jack ma. first, our lede, the continuing saga of uber's legal troubles. the company facing two additional criminal investigations. there are now five ongoing probes in the world's most viable start up. eric newcomer uncovered the scope. he joins us now. when i saw the notes this morning, i'm like, really, haven't we done this already? i've got to think the legal
department at uber is feeling the same way. eric: it takes a long time for things to wind their way through. we knew about three criminal probes before. we are reporting two new ones. we are now up to five. cory: these are all federal? eric: yes. cory: why are there five? why isn't there one big one? eric: there are five different areas of focus. there are different units within the justice department looking at different parts of it, but very quickly, we have bribery, fcpa -- cory: foreign corrupt practices act. fancy acronyms. eric: we have one rooted in the waymo fight and how they obtained -- whether they obtained trade secrets there. we have pricing. cory: that's the pricing -- the "hell" software program?
eric: pricing is the one we know the least about specifically. uber separated what it charges consumers and what it pays drivers, and there are a lot of questions around how it does it and how it calculates price. cory: they might be charging you and me different prices to go to the same place at the same time because you are loaded and i'm not. eric: there are lots of questions about pricing. those are under investigation. "hell" and "greyball" are the remaining two, and they are software. hell was learning about competitors. lyft's api, their public data, seeing where drivers were, learning about them. you are not allowed to violate a you are not allowed to violate a competitors' terms of service when you agree to scrape the data. the general understanding is you will follow the rules they give you about it, and uber might not have. cory: which pieces are new?
eric: waymo going criminal and the fact that pricing is under a criminal suit as well. cory: the suit between waymo and uber is imminent. there was a delay when some new information came out. when their internal investigation at uber became part of the record and that paused the trial. what's the effect on the trial that's about to happen? eric: there's a risk that it could slow down. if people start getting subpoenaed or are worried they are going to have to plead the fifth, it's possible that it slows it down. it depends on uber's desire to do so. so far, they wanted to move along and get this resolved. cory: it's interesting. having a new ceo and perhaps a new philosophy from many new board members might change the way they want to fight against these things. it's not just the sins of the past. the old uber might be very different from the new uber. eric: there is a question of how much they are trying to defend past behavior versus saying we
have reformed, separated from their old ceo, changing the general counsel, firing a number of people after holder's investigation. that question, whether they are positioning themselves as a new company or the same old company defending themselves, is an open question on some of these probes. cory: eric newcomer, thank you very much. more coverage from the geek wire summit in seattle. the biggest players in the area, amazon and microsoft, reviewing their efforts to improve diversity within their ranks. sukhinder singh cassidy joins us for a company that connects boards and qualified female candidates. she was a former executive at amazon. good to see you. tell me what you are doing at geekwire in seattle. sukhinder: i'm here talking
about my favorite topic these days, diversity in tech and corporate governance, and, boy, are they intersecting right now. cory: what's the audience in terms of that message? what's new in that conversation? sukhinder: in terms of what's new in the board of directors conversation, i think we need to look back to the last nine months, even here in the valley. of course, we can look to hollywood right now for much of the same unfortunate news, which is, boards of directors being surprised by allegations against the ceo, which brings sexual-harassment or sexual misconduct allegations. i think what we are really learning is that corporate governance is behind in the valley and particularly behind when it comes to matters of gender. cory: it doesn't seem like there are a lot of surprises that relate to hollywood. as it relates to silicon valley, this horrible behavior by some
individuals is kind of an amazing thing. when i think of it from an investment standpoint, we know the companies that have diverse boards, diverse leadership outperform as investments. what message -- i would think that is a very convincing message to give to boards, because they want their stocks to do better, because investors want them to do better. but for you, when you are meeting with these executives, meeting with these boards, what message wins the discussion? because no one is against this. sukhinder: no one is against it, so we all wonder why doesn't it happen faster. i spend the vast majority of my time talking to private company ceos, far more than public. because i think the opportunity is to use diversity to change the direction of their companies. most are driven by venture capitalists which brings one perspective, but it lacks the operating perspective. it lacks having a peer in the room. it lacks having the expertise you need in the room around customer engagement or acquisition or in culture or who your customer is.
these are perspectives missing from the boardroom that could significantly change the probability of success for a founder. those are the arguments that hold the most weight, which is an independent board and a board that brings extra expertise that, quite frankly, you don't have in the company, gives you a better chance of winning the day. at the end of the day, that's what founders care about. cory: amazon, an infamously difficult place to work, you worked there for a while -- how is amazon doing in terms of diversity? sukhinder: i think it's a great question. it's no surprise if you survey all the tech companies, the large ones, whether you are talking about the big four or five, all of them have diversity challenges, and they have been transparent in sharing that data. what i think is more encouraging than not is that they are all actually sharing that data, which we don't see in private company dynamics and that's part of the problem. there is a lack of transparency in smaller companies. at the larger ones, i think this
is going to be a multiyear battle, at amazon included, in order to get a gender equal and a diverse set of talent to the table on every job and in every role and at every level. i think amazon is not faring any better or worse than google or facebook, but recognizes this is a multiyear challenge. cory: do the headlines of weinstein and the weinstein company and harvey weinstein -- does that kind of thing help the cause? sukhinder: for sure. look, i mean, you know, as much as we look at the board list as a positive force in the industry and very solution-oriented, i don't think anyone can take away from the power of repercussion in the negative sense, and i think the harvey weinstein case in some ways just reinforces much of the same bad behavior we've seen at certain companies and the repercussions for the ceo or for the investors or the board members for not being aware. so, although it's a negative
case and it's unfortunate that that's what it takes to bring attention to the issue, i think whenever there is real loss of power or status or money, you know, people finally take action. so, to answer your question, yeah, what's happening with harvey weinstein does help the cause, even if it's an unfortunate case. cory: sukhinder singh cassidy, thanks a lot. the softbank ceo tells the story of his most profitable investment of his career. we are live streaming right now on twitter. check us out on weekdays, 5:00 on the east coast, 2:00 on the west coast. this is bloomberg. ♪
♪ cory: a story we have been watching, qualcomm fined a record amount by taiwan's fair trade commission for violating antitrust rules for at least seven years, collecting licensing fees from local companies during that time. qualcomm disagrees with the decision and intends to appeal. now softbank's founder invested in more than 1000 companies, but one investment looms above all, an early bet on alibaba. son talked about the investment. >> one of the investments you made is considered to be the most successful investment in the history of mankind. you invested roughly $20 million in alibaba. at the time it went public, it
$90 billion,ghly so $20 million to $90 billion is a return of about 4500%. jack ma is a very distinguished individual, now one of the most important entrepreneurs in the world. what made you put in $20 million? >> he had no business plan. , 35-40 employees, but his eyes was very strong, strong eyes, strong, shining eyes. i could tell from the way he talked, the way he looked, he had charisma, he had leadership. so his business model was wrong. it's the way he talked, the way he can bring young chinese people following him. famous,e god who was so
you made an early investment in it which was profitable. how did you hear about it? >> it was still private, 15 employees, and i convinced them to take $100 million of our investment. at the time, we negotiated -- we agreed, they grew from 15 to 35 people, and we invested $100 million to own 35%, and actually went ipo and made a great return. at the same time, i convinced him to start a joint venture, yahoo! japan. in $1.2 million. they put in startup capital. $2 million we owned 60%. >> let's talk about one big mistake overall. you were making a lot of internet investments around 2000, 1999, 2001.
the market went down and the tech crashed. it is said that you personally lost $70 billion of net worth. the greatest loss that any human being has ever suffered financially. how did you feel losing $70 billion of net worth? >> one year before that, actually, my net worth, personal net worth was increasing $10 billion per week. [laughter] i becameree days, richer than bill gates. >> did that upset him? >> no, before i told to anybody else our stock started crashing. >> ok. >> so, in six-month after that, our share price went down 99%. so, we almost went bankrupt. and somehow, i survived.
i want to get to lots of cats and dogs questions. how would you characterize the startup scene in seattle? what drives it? greg: first of all, great to be with you. the startup scene in seattle i think is really driven by engineers. one of the things that seattle, thanks to the university of washington, amazon, microsoft, has is an incredible engineering backbone, incredible engineering talent, most of which has been imported here, so we really benefit from engineering talent. a lot of people think it is the heart of most great technology startups. cory: so, really sort of focused on the geeked out part of it, what's technologically possible, as opposed to a marketing focus a la steve jobs or a product focus? greg: i definitely think we have -- one of the things we are lucky to have is really strong technology folks. so, we are compared to, say, silicon valley.
we have a lot of strength in engineering and the hard science around big data, machine learning, artificial intelligence, cloud computing. those are really areas of strength for seattle vs. nywhere else in the world. so, you will see a lot of great companies in those areas from here, as well as other companies like e-commerce. mobile grows well here. we have certain areas of strength, but engineering in particular. facebook and google and a lot of the large technology companies have opened their second largest, other than silicon valley, engineering hubs here in seattle, so we really benefit from that in the startup world as well. some of those people eventually fall in love with the city. those of us in the venture area can take advantage of some of the great folks who come from
the amazons, microsofts, facebooks, googles, that ultimately want to go and start a company. cory: my friends make sure they don't do recruiting in february. they make sure it is when it is sunny and wonderful. tell me about rover. greg: rover is the world's largest dog sitting, dog walking, overnight care company in the world. we have hundreds of thousands of customers. tens of thousands of incredible sitters. it was an idea that really stemmed from an issue i had at a kennel where we took our dog. my parents were out of town. i couldn't find someone to watch our dog. i took the dog to a kennel, and it was one of the worst experiences i've ever had. i thought someone could do this better, maybe someone down the street who wanted to make a little extra money, who would
love our dog as much as we would. that was the birth of rover. it has turned into something special. cory: the uber of dog sitters. feel free to correct me. how has the business grown? how big is it? why is it important that it started in seattle, if at all? greg: so, it's across the united states. every city of any size has rover sitters and dog walkers. it's in the hundreds of millions of dollars. it's a real business. one of the nice things about this business is, if you're going out of town, it's not a nice to have to have someone watch her dog. someone needs to watch your dog. rover is a superior, less expensive, and better all around solution for people that really love their pets. so, that's why i think it has really caught on. the other reason it has grown so well is it has an incredible
team of people that are passionate about dogs and they have really done an incredible job of executing on this vision of every dog -- every person should be able to have an experience the love of a dog. for those of us who have dogs, i have older kids now. they are not the ones greeting me at the door anymore. it's the dog who comes running up and is looking me on my face. everyone should have that experience if they can. cory: not every startup provides the added benefit of getting licked on the face. that's great stuff. you are going to ruin the last of my excuses of why i don't get a dog, so i'm hoping my kids are not watching bloomberg tv right now. greg: your kids should definitely get on that. cory: you are not helping the argument. greg gottesman. thanks a lot. we appreciate it.
coming up, microsoft is taking on amazon web services head on. we will look at their latest moves and the ways they are going after the big cloud business. and if you like bloomberg news, check us out on the radio. check out bloomberg markets with me and carol massar on the radio every day. we are in washington, new york, boston, and the bay area. we are on bloomberg.com, also in the u.s. on sirius xm channel 119. this is bloomberg. ♪ is this a phone?
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>> 11:29 a.m. in singapore. 12:29 in tokyo. kobe steel says more fake data product may come to light as it steps up a global investigation. 30%stock has lost more than and $1.6 billion of value was wiped out. motors is the latest big name to check exposure to the scandal. the c.e.o.g, kawasaki apologized and said the trust. has lost taiwan's expert surged to a record last month on strong demand for electronics and general rise in global optimistic.
$29.9 billion,to more than twice the estimate of every economist surveyed by bloomberg. exports to china and japan levels whilecord imports beat forecasts, as well. the latest fed minutes reveal detaileders held a debate on whether the forces holding back inflation were temporary.or several officials wanted beforee of rising prices supporting a rate hike. the minutes suggest shows the forecast to rise to 2% inflation is achievable in the next couple of years. news powered 24 hours a countries. than 120 check on the markets, asian stocks charging ahead as perceived fed minutes
to be on the dovish side of the spectrum. with so much cash, it was hard turn bearish on equities when you see this field of green. at multi-yearding highs from taipei to bangkok and in seoul on wellington. far00 magic may not be too for the nikkei 2225 set for a november 1996 high. nikkei 225 has broken through a key retracement level 38.2%. sight.el could be in bear in mind, we're about 46% hit in all-time high 1989. it'saking the long true, taken time for the nikkei 225 to levels.o no to 1996 the s&p 500 in this period has surged 243%.
only italian equities have fared worse than japan in this period catch-up andom for stage two global analyst said highest earnings potential. the market snapshot. i'm: this is bloomberg, cory johnson. bringing you guests from the summit in seattle. kurt delbene talked about cloud supremacy. kurt: i think our offering is strong across the board. you think about our differentiation in the hybrid approach where you transition to the cloud as you want to on-premisesut have capability, as well. we're working at all levels in stack, whether o.s. level, database level, a.i. on top and levels,people at all
productivity, figuring out how 365 integrates. customers are thinking about the have withip they microsoft and that sweep of can get.ies they >> i'm curious how you see the divided in the future? how do you avoid amazon becoming fordefault choice customers? kurt: we're doing very well in think whatso i you're seeing playing out is there won't be a default choice per se. at that and the particular opportunities for the what the value proposition is for us versus amazon versus others. any one vendor will be the default choice. you'll have strength in the market with the people emerging now. you see movingas bigger and faster in in the future compared to amazon and others?
kurt: i think we will be stronger in hybrid capabilities, database offerings. think of all the people you see on premises today and some of the announcements we've made in of being a surge to the cloud in terms of database but also super easy movement to the cloud so at the database layer i think we'll be stronger. a.i. capabilities and cognitive services, as an applications environment but also when you think about all the data that's 365, all the productivity data, who i'm with and talking to, how do i as either a third party who uses or somebody office 365 leverage that data to build rich applications, as well. >> you did a panel with three investors on stage and they v.r. is overhyped and it's not growing as big as people expected. two big areas that microsoft is playing a bet on. how do you respond on that? is going tok it
emerge over a period of time. i think we're seeing early wins, the industrial space, people using hollow land. i think we're seeing developer interest in capabilities in theses but in any of technologies there's a period with a lot of hype coming in and building of the actually use cases and building excitement and i think there's there's that building period we're in today. i think it's also a great opportunity for us because if the vision and you believe that's important over the long run, those are the you sayof time where i'm doubling down and will be strong in this area and it gives time to build a super rich offering. >> when do you think mixed reality will be everyone's reality? kurt: i think you will start to see augmentation of your reality the next several years. i think you'll be cases like hollow lens but also the ability there's a bunch of focus around this notion that you can show and's -- put your phone up
see the combination of a scene that really exists in front of with augmentation. i think those scenarios will emerge soon. president obama asked you to oversee healthcare.gov and the rollout of that. what's it like watching all of the efforts the trump administration is taking to roll back? >> on a personal level, it's very difficult to watch. on a personal basis, i believe people have a right to affordable healthcare. i think the obamacare, a.c.a., is a strong foundation for building that capability to deliver healthcare to all citizens of the united states so is a personal point of view. it's hard for me to watch. >> before you ran healthcare.gov, you ran microsoft office. i'm curious how you think productivity will be different in the next one to five years. will the way i work change? kurt: in a lot of ways it will being moreverything
seamless and easier to do so for instance think about how teams work. we've done a lot with microsoft teams to say there's stow -- so many different channels as how team actsicate but a as a single unit so how do you together into one place. for the first time i think it's opportunity. i've worked in collaboration for so long and it's always been this offering and this offering but how did it come together, i think you'll find a where people intuitively come to a team site and all the together want to work are just there. cool.that's kurt delbene and emily chang joins me live. how's seattle? emily: seattle's fun. second biggest tech hub in the country. they're very proud of that for a was a two-horse
area because microsoft is adjacent tobelview, seattle but beyond amazon and microsoft you have facebook and google and alibaba and baidu opening offices here and start-ups. you spoke to folks from pioneer labs. in speaking with rebecca lynn, capitalist, she talked about how folks in the tech are more loyal to the area and that loyalty can pay off productivity. take a listen to the conversations we have been having with folks up here. seattle, of course, is one of the major tech hubs in the world. inboasts 100,000 experts i.t. and cloud computing. continuesrt-up scene
to evolve here. the i think it's always been strong but when you go around seattle you see the amazing of new companies that have come up. >> i think seattle is sort of like the cloud capital of the world. it's definitely cloudy in the weather but really between and microsoft and all of these other companies, you're incrediblynd an fervent engineering environment creativity. emily: the clouds have been so we've very much well.d the weather, as cory: nothing better than a beautiful day in seattle. emily chang, great stuff all week. coming up, zillow dabbling in 3-d technology. in seattle,mit next. ♪
cory: rich people are avoiding investments in bitcoin according to sergio armada who told net worththat high investors are curious but still too skeptical to invest in currency. moving to real estate, online listings got a bit more three dimensional. emily chang spoke with zillow's rascoff, at the geekwire. spencer: we're allowing a listing agent or home seller to style photosramic with a regular smartphone to get athe home buyer to full perspective of the home. city testing this in one 2018. it's about providing the tools so people can do a better job imagining what life home.be like in that emily: and new you data in rental? wencer: we've taken the data have and packaged it up for
multifamily partners so people a 20,000 types of buildings, they have information on what types of buildings are people looking at, what rents paid, what's the demographic information of these renters and can make decisions about their asset management portfolio, pricing strategies, branding of these buildings and it's another way of taking data and empowering people, professionals, with the information. emily: how does this affect your bottom line? spencer: we're giving that data free to building managers. we sell advertising to them but we think becoming a bigger part of their business strategy is a better way to sell them advertising. photography,f 3-d it's about providing more differentiated content on the site and generates more traffic. emily: when you look across the ofntry, where are signs strength and weakness? spencer: the whole country is housing.lly well in home values up 7% year oryear, very high. the country is
so one out ofue two viewer's homes are worth more than they were worth at the but thehe last bubble last bubble was built on a foundation of sand, easy credit. on ahousing boom is built supply-demand mismatch. enough homes because in the recession, homebuilders were building fewer so we have a couple year deficit of a couple of million missing homes that don't exist and when you have good demand, enough supply, values go up. in seattle, values are 12% year over year, a really strong local economy, limited supply, relatively anti-development environment where it's difficult to build driving prices up. emily: is it possible there's an isolated bubble in seattle, san francisco, in coastal cities
run-ups. see spencer: we hesitate to call it a bubble because the appreciation has a foundation that supports it. it's limited supply. run-ups. unsustainable in the sense that home values in seattle can't go up 12% year over year forever but it's not a bubble because it has market fundamentals. emily: when does the slowdown happen? spencer: nationwide, home values 7% year over year and there's a slowing in the rate of a decline.n but not emily: do you see an impact to prices as a result of the in florida?n texas, spencer: in the near term, absolutely. what ends up happening in is incrediblyers housing is resilient. case of sandyhe katrina. arey: how important first-time home buyers?
spencer: very important. transactions of going to first-time home buyers. millenials bought $500 billion of real estate in the last 12 months so millenials and first-time buyers represent a market andn of the they're getting more creative, because of the limited supply, make multiple offers, dual track, looking at versus renting versus buying at the same time. uncertainty, do you expect that to trickle into the real estate market? spencer: hasn't so far but as mortgage rates tick up, that slightly lessing affordable but so far we haven't seen it. cory: zillow c.e.o. experience experience -- spencer rascoff speaking with emily chang. up, alibaba jacking up spending to keep up with rivals. ♪
cory: check this out, kids getting an allowance on amazon. amazon has a new offering allowing teenagers them to shop or stream content and stay within spending limits. kid wants to spend more, it will require parental approval offered via text message. allowg them to if parents are prime members, teens will have access to the two-day free shipping and gaming twitch.n owned r&daba more than doubled spending to $2.5 billion last year. keeping up with google and the to open sevenset
research labs, hiring 100 scientists around the world exploring artificial quantumence and computing. joining me to discuss more, salina wang. is so interesting. and their ambitions seem as massive as china. >> alibaba is always trying to precedents and this is the first time they're extending outside of their own in-house, every r&d staff to reach corner of the world to find the cream of the crop. and want to beat amazon microsoft and say china also can be at the forefront of new mantier technology and jack thinks a.i. will drive the future of many industries and alibaba's goal is to create 100 million jobs over the next two believe that
doubling down in r&d will help them get there. find a.i.will they haven't already googlejobs at amazon or or uber or tesla. know -- cory: oracle and sales force. it's never ending. isgetting tech talent notoriously difficult so they're looking all over the world, across asia, in the middle east and have partnerships with harvard and princeton. they've signed on researchers to sopart of the advisory board this won't be easy but with $15 billion, that's a lot of money them to be able to target top tech talent and this is a prime time to do it because they're now an enormous country. $400t cap north of billion. yesterday briefly passed amazon's market cap and is profitable so they have
the money to spend on this. cory: it's interesting, when it a.i., one of those things you can't plug and play. you can't buy it somewhere. amazon creates a surface using a.i., it's an amazon-only service. can't buy the software somewhere else. recognizes they want to build a global infrastructure not only in e-commerce but also other ambitions -- self driving cars, cloud computing exceedinglygrowing fast but it's important to put this into perspective. $15 billion is a lot of money to how much amazon has spent in this area, it's actually just a small fraction. alone, amazon spent in thisn $16 billion r&d area and in the context of if we look atng, terminal,he bloomberg it's been 10% relative to sales it'sast several years so
not that unusual. cory: so their growth rate, companies, other compared to facebook spending 21% of sales in recent years although that number has been all over the place for facebook but it's interesting, on a quarter to quarter basis but is the notion that needs to keep up with revenues being so high? >> absolutely. amazon and google have traditionally been leaders in artificial intelligence and in notr to stay ahead of that, only with domestic competitors, but also amazon, they need to and relative to sales, this is in line with that because their revenue is to more than double next year. cory: will it suck away from reported at over $9 billion last year? >> investors don't care. price keeps inching higher and i think investors are bullish on their investments in a.i. because this is an area where they need their own in-house research to have their technology in this area.
cory: is there any sort of particular product area we think in? might show up is there some product they think ords a.i. to make it special quantum computing to make it special? sore is it just they want to know what's going on in technology for the mix? >> part of it is beefing up core competency and making them smoother. e-commerce, logistics, it requires huge infrastructure to have the system move smoothly much data flowing nout now the of their network. they have their own echo like device and machine learning will fits intont and this the chinese government's bigger a.i. of being leaders in so what alibaba is doing is favorably by beijing. cory: thank you very much. appreciate your time. we're live streaming on twitter. us out, every week day