tv Bloomberg Technology Bloomberg October 12, 2017 11:00pm-12:00am EDT
alisa: i am a alisa parenti in washington you are watching , "bloomberg technology." let's start with a check of "first word news." president trump has signed an executive order to start unwinding the health care law, making lower premium plans a widely available and allowing consumers to buy plans across state lines. it may not happen in time for 2019. his chief of staff john kelly says he is not leaving his job anytime soon. >> i am not quitting today. believe i do not think i , am being fired today. alisa: president trump has introduced his pick for homeland security secretary.
kristen nielsen is deputy chief of staff under kelly. the house has passed a $36.5 billion hurricane aid package. $16 billion will pay for flood insurance claims and emergency aid to help her to rico. florida and texas have requested about $40 billion. the death toll from wildfires raging in california is now 26. officials expect that to rise. more than 8000 firefighters are battling the blaze is with additional manpower and equipment on the way. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm alisa parenti. this is bloomberg. ♪
emily: i am emily chang and this is "bloomberg technology." coming up, facebook's sheryl sandberg goes to washington in pledges full cooperation from the social network. the investigation into election interference and when the public and -- can expect when do see more than 3000 russian linked ads. plus my wide ranging exclusive amazon's c-swith uite. had to say about improving the customer experience with ai. china officially demands a piece of its biggest tech company. do they want beijing at the table? the potential power grab is under the microscope. facebook coo sheryl sandberg says the company absolutely supports public release of 3000 bought ads are in
the presidential election, but says it is up to congress to decide the appropriate time to do so. to was in washington, d.c. talk about these ads. take a listen. >> we are giving them our peace. -- piece. they can understand the whole picture. they have access to more information than we do. what i reiterated in those meetings is that we think it is important they get the whole picture and they explain that transparently to the american public. emily: joining me now is the founder of google ventures. and sarah frier. sandbergs about what had to say and what it appears her strategy is? facebook has been over communicating in this whole ordeal. they want to make the point that they are taking responsibility for what it was that ran on their platform. but that they are not taking responsibility for the fact there were divisive political ads.
sandberg mentioned several times facebook is all about free speech, they do not want to in a anyone's expression, position of what can and cannot be said on facebook in terms of ideas. but when it comes to fake accounts, she is taking responsibility. emily: how bad is the position facebook event? >> i do not want to overstate it. they are good people. they are dealing with a platform that was weaponize in an unpredictable way. it is a surprise to a lot of us. but there is some responsibility for the users of facebook to not make your decisions based on advertisements they might click on. emily: what is our responsibility? bill: to take seriously your responsibility in this democratic republic to understand your issues, look at the source of the information, and make an assessment. i would not say that everyone is
a victim in that sense. you have a nationstate in russia that is trying to influence an election. i think we need to focus on that as the real problem. i would not hold facebook's feet too much to the fire on this. emily: sandberg spoke in washington. what do we know about the discussions? sandberg explained to them how things were working on their end, the extent to which they have gone into looking at the russian ads. the fact that they realize there is more to do and she is asking for cooperation from the intelligence community. they looked into stuff known from the research -- internet research agency in russia which is connected to the government. they need to know the other places they should be looking if there is more of a greater threat. this is something zuckerberg came out and said after the whole discovery of russian ads is with intelligence communities , around the world, they want to
be looped in on what they should be looking for and work with other companies. emily: your former company, google, is involved here. you have fake news spreading and -- across the platform, russian-bought ads on youtube. what is google's responsibility? bill: all of the owners and operators of tech companies have a responsibility. at the same time, you are seeing a nationstate that is trying to take advantage of a population by dividing and making us choose sides and of fomenting the sense among its own people, and actually, it is working. we are fighting with each other, theer than looking at problem, we are not under attack from missiles, but under attack electronically. that can be almost as dangerous. emily: facebook is saying they are making changes, hiring another 1000 people. they are saying all humans will approve or disapprove of
any political advertising that is bought correct? , sarah: they are saying that will go through a manual review. the 1000 people they hired are looking specifically at ads targeted to people based on their politics or race and things that might lend themselves to a little bit more incendiary content. emily: as you say these are , actions coming from a particular nationstate. now that we know, what is the responsibility of the platforms? what should they be doing? bill: they are doing the right thing, cooperating with congress being transparent and answering , questions in being an open source at the ads in who would they were targeted. i have a lot of faith in these companies, but mostly the people that work there to try to do the right thing. we are in the midst of an investigation. what more can we ask of them other than to cooperate? emily: sandberg answered a lot of questions. what didn't she answer? sarah: one thing she dodged is the question whether the targeting on the ads that ran
backed by russia had anything related to the targeting of the trump campaign. that is one of the things investigators will look at to try and see if there are any ties between trump's strategy and russia's strategy and any evidence they were working together. she said when the ads come out, they will also release the targeting data. i guess we can come up with a conclusion then. emily: looking forward, how big a crisis is it? the election aside, fake news, political advertising, how hard are these issues going to be for the platforms to deal with? bill: if it is not facebook, it will be another platform. the key is to secure the platforms as much as we can from future influence. they will find other ways to try to foment and hurt the american people. the key is to try to minimize that. i don't think it is a crisis. a crisis is a fire raging
11,000 model x suv's due to possible issues with the second fold flat seats. only 3% of the electric suv's are being recalled, only 3% of them have issues. the problem involves incorrectly adjusted seat cables. tesla said it has not received reports of accidents related to this problem. cobalt announced it has raised another $14 million of gross capital, bringing the total amount raised to $89 million. the music royalty company start up has bill maher's as their leading investor. he is also joining the board. section 32 founder bill maris is joining us. you raised $160 million. how do you keep up a pace like that? we only make one or two
investments a year. bill: i am not your average vc. at google, we were doing 50 to 100 investments a year. the pace of 15 to 17 a year feel -- feels somewhat leisurely. i am also drawing on a network of entrepreneurs and founders i have known for quite some time. my wife is a kobalt musician. emily: when you look at potential investments, what are you seeing? a lot of good ideas do you see promise and high valuations? bill: i am seeing the market has changed tremendously in the last five to 10 years. it is changing in a way where it may not change back. softbank is out with $100 billion fund which causes a lot of strange behaviors for startups. it compresses returns because of valuations go up artificially.
i am also seeing changes with regard to cryptocurrencies and coin offerings that may obsolete a large part of the venture business. emily: how so? bill: when you can raise crowd source money from a large group of people in a week, that makes it a much less painful process than talking to people like myself and going through the analysis and the time that it takes to raise venture money. that is a more attractive proposition to a lot of entrepreneurs. it will change the business. emily: how dramatically could this impact silicon valley? bill: i think these technologies are likely to fundamentally shift. it will not obsolete everything, but it will shift the way startups are funded over time and the way a lot of transactions are handled. emily: what does it mean for the prominent vc's? bill: you will have to adjust
your business lately. the bell is not necessarily tolling right now. there are a lot of a venture funds and a lot of people with capital. that will change the way we invest. emily: the bell is tolling for that? bill: we will see. emily: bitcoin. you have invested in it. yet jamie dimon says bitcoin is a fraud. which is it? platformn base is the on which people can trade cryptocurrencies. bitcoin is one of them. i think jamie dimon is incorrect. there is a bubble, money to be made and lost. if you take the value of all of these startups, it is a $70 billion industry. if that is a bubble, it is not a very big bubble. there is some enduring technology that is likely to last. we disagree on that. emily: what about ai? some people say it is overhyped.
some people like elon musk, say it is the end of the world. bill: if you think russian interference in the election via ads placed on a social media platform was bad ai could be , much worse. i am more in elon's camp that we should be gravely concerned of the potential for misuse of a technology this important and powerful but also incredibly optimistic about the way it may transform society for the better. emily: what are the potentially very dangerous consequences? what do you see happening? all: if you can create supercomputer to teach itself and outsmart people -- look at it in these terms. it would have been very difficult to predict five years ago that russia would try to interfere in an election to get someone like donald trump elected at that time based on , what we knew about that platform. to look forward five years or 10 years and think the same about ai -- whatever prediction we make will be incorrect.
there will be some ways that technology is used that is unpredictable and probably negative in some ways. i am optimistic we will find the right way to deal with it. but there is reason to be , concerned. emily: you think there is potential for an ai apocalypse? bill: absolutely. emily: how so? bill: think about the power of a supercomputer that can teach its self and is smarter than anyone on the planet. who controls that technology? is it a private company, a government, our government, a different government? what if there are more than one? or computers decide humans would make a nice pets? or are not very helpful to their future? i do not think that is overstating it. ts concern inarran conversation. just as if we were developing the first nuclear bomb, it can be used in positive ways and in terrible ways.
emily: let's talk about uber. we have seen a lot of drama, travis is out. there is a new ceo. what do you make of the reckoning? bill: i don't think travis is ever out, he is maybe not ceo anymore. i would like to think that season one of uber has ended, i am waiting for the season two premiere. i think it will be a better series of episodes. i think very highly of the new ceo, dara. i am very optimistic they are trying to correct the things that were done wrong. emily: how much responsibility do investors bear for the problem getting out of control, or giving travis too much control? bill: i can only speak for myself. whatever influence i had was not useful and was not heeded. emily: what kind of advice did
you give? bill: giving advice implies that someone answered the phone. i think investors bear some responsibility, but we should hold those who took the actions to be responsible. you are a minority shareholder. you do not have control or a board seat. did not really have a vote. you try to influence things as much as you can to go in the right direction. at the end of the day, the right thing happened and is happening and there is a reckoning. hopefully things will be set straight. they have some things to fix. emily: bill maris. thank you for stopping by. amazon says its a virtual assistant technology is that the early stages and has a ways to go. the surprising length they are going to. this is bloomberg. ♪
emily: amazon tells us it would not rule out partnerships with major rivals if that means improving voice-activated technology. i sat down with vice president of alexa and echo devices, to talk about how she is focusing too better improve the customer experience. what are the challenges that remain to get more people to do this? what are the challenges you are most focused on? toni: i am most focused on trying to reduce friction for customers and drive toward customer experience. the idea there is that alexa is more humanlike. it is conversational. we can shorten the past from where the customer is starting in where they want to be with less and less work on their part.
emily: is alexa going to be responding with uh-huh. toni: i joke that that will happen. emily: how much further can you go when it comes to understanding human language? an adult talking, or a child talking -- or are we there when it comes to how much improvement can be made? toni: we are not there. it is day one, super early stages. we like to say we are at the tipping of machine and point artificial intelligence. i think we will see a lot of improvement over the next few years. emily: how so? toni: the technology is there and having developers being able to feature a cloud and it allows for a lot of compute power. what is missing from alexa?
toni: human conversational behavior. alexa and the skills we have today are great at reducing friction and making the expanse -- customer experience more delightful. we still have a long ways to go to make it an even more robust experience. emily: you recently partnered with one of your biggest rivals, microsoft and cortana. what does a get with cortana that they might not get with alexa? toni: i am excited to see the launch. we see a world in which there will be multiple ai's. you will have experts in certain domains and bring more data. it is kind of like the internet in a way. customers will be able to search out experts in the space. and you can probably have a broad set of ai. emily: will we see you
partnering with other rivals in december? toni: why not? emily: how do you make those calculations? toni: we are customer-focused. it has served us well. we are passionate about the customer-first approach, and we work backwards from that. if we believe it will benefit customers and improve the experience, we will work towards it. emily: is the vision for alexa a center of a bunch of home devices or the home device? toni: we see alexa as being an ambient experience in the home. customers can invoke this experience wherever they are. we also see that going outside of the home. we have announced partnerships with automobile manufacturers. it will be embedded in some of the cars, bmw is one of them.
we have a partnership with the wynns. if you're traveling and checking into a hotel, you can experience alexa there. we see it going beyond the home. emily: you see home security as potentially an area of interest? toni: potentially. the auto space or hotel rooms. emily: amazon and alexa got a huge jump. now the competitors are there. what are you doing to stay ahead? is there anything you see your rivals doing that is impressive? toni: i am impressed with a lot of the innovation that is happening in the spaced. we are super focused on building for the customer. we think customers will win. emily: that is toni reid. vice president of alexa and echo devices. coming up, amazon not only taking over home with a alexa, but keeping its head in the cloud.
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and 12:29 p.m. in singapore. the white house says it cannot car reduction payments to insurance companies under obamacare. it said the department of health has concluded there is no appropriation for the payment and that a court has agreed it makes it unlawful. president trump signed an executive order that could erode core parts of the affordable care act, after republicans in congress failed to repeal it. j.p. morgan chase in citigroup picked up about bank earnings season, showing the effects of
muted trading. low volatility weighs on fixed income trading. and 60% at jpm, citi. shares fell after they boosted reserves by the most in more than four years. the trump administration has body,nother world accusing the u.n. cultural organization against -- of bias against israel. in 1945.s founded the state department says the decision to leave was not taken lightly. we provided $70 million a year back in 2011, when they accepted palestine as a full member. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> i am sophie kamaruddin with a
check on the asian markets. this morning we had a chinese trade figures in dollar terms, imports rising 18%. at a .1%. added field to the chinese fuel rally, the large cap gauge rising for a ninth day, with health care leading the gains. ground,ollar gaining 0.2%, hanging on to the 78 handle. the asx 200 picking up 1500 points for the first time since june. a lot of chinese stocks on the outs. the hang seng seeing weakness. discretionary stocks continue to drag this friday. while the hang seng has been tumbling, the kospi has surpassed it as asia's best equity market of 2017. foreign funds returned after dumping stocks and bonds throughout september.
thursday they reaffirmed south a-rating.le that is the market wrap in hong kong. ♪ emily: this is "bloomberg technology," i am emily chang. amazon says that the shift to the cloud is just beginning. it surged 42% to more than $4 billion. i sat down for an interview with and asked andy jassy if the growth of the unit had surpassed even his wildest expectations. andy: it is certainly grown very fast. none of us would have had the audacity to think it grew as fast as it has. we'll is believed it had a chance to be a successful business.
amazon, a strong technology company, we have a lot of teams that want help moving faster, more cost-effectively to build applications on the new platform. this mademazon wanted us think third parties would want it. i do not think we would have it would be a $15 billion revenue business, growing 40% year-over-year. i do not think we would've predicted we would have several times the size of the business of 14 providers combined. millions of active customers, a six to seven year head start. all of those things were big surprises. emily: your competitors want this, too. how do keep amazon in a leading position? andy: it is not a surprise to us that every large technology company wants a replica of what aws has done. it is a great value for customers.
others want to participate. there are real differences between the platforms. aws hast thing is that more functionality than anybody else. gap and capability continues to extend. they are different ecosystems around these platforms. it is not just thousands of system integrators that build practices around aws. but most will adapt their software to work on one technology in the structure platform. very few have the time to do three. they all start with aws because we have a significant leadership position. the maturity of the platforms are in different places. we have an expression we use internally, that there is no compression algorithm for experience. you cannot learn certain lessons until you get until certain elbows of the curve and scale. 14 providers
combined, they have not learned the lessons yet. as a: you just added ge customer, but you lost spotify and google. tell us the links you're going to to get new customers but keep the customers you have? any: the way to think about active customer is, a non-amazon entity that uses our platform over the last 30 days. we have millions of active customers. the big, successful startups have built their businesses from scratch. these are companies like pinterest, airbnb, robin hood. years, thest three enterprise of the public sector has dramatically increased to the cloud and you see every meaningful vertical business segment using aws. if you're talking oil, gas, financial services -- capital
one, think of australia. manufacturing, ge, they have been working with aws for a long time. phillips --ric and they run everything on aws. sector we have nearly 3000 government agencies using it. we have more customers in every imaginable section. you mention netflix, your biggest competitor in streaming. is there any scenario where you would not serve them? amazon's it is consumers biggest competitors. it is a separate entity with a separate leadership team. we realize if we want to serve a lot of amazon's consumer business competitors, we had to not only have the most functionality and the best platform, but we also had to
treat the customers as every bit as important as amazon's consumer business. in fact, if you were to talk to netflix, they would tell you aws treats netflix as important as amazon's consumer team. i think you have to live to that and amazon's consumer business is a really big aws customer. that they are really just one large external customer. and that is the way we treat the relationship. emily: google, facebook, alibaba baid have offices in seattle. uwould you do to ensure your talent is not get poached? andy: you want to hire people that fit your culture. for us, it is builders. when i say builders, i mean people who like to invent, look at different customer experiences and assess what is wrong with them and reinvent them. people that get the launch
is the starting line, not the finish line. anything you want to be successful long-term, you have to hear from the customer what is important and reiterate on their behalf. you want a higher what fits your culture, builders for us. and make it a place where builders can build. he hopes for a place with .e.m. education. are you jostling for your hometown? andy: that is above my pay grade. none of us knows where it is going at this we are in the point. middle of the process. emily: the doj over trump, over -- over obama have been contentious in that cloud companies need to turn over data. even when that data is overseas? how much of a concern is that for your overseas customers? andy: customers from the beginning of aws have cared
about this issue. they want to make sure the data they have on the cloud is secure and private. our view is that our customers' data is our customers' data. in the scheme of things, even though it has become an interesting issue, there have not been many occasions of beennment being able -- occasions of government asking for the data, but for companies worried about it. when you encrypt the data and keep the keys yourself even if , the government tries to us, if they- for ask, we advocate on behalf of our customers. they have to come with a subpoena. in the odd cases where they may be able to come with a subpoena, if you encrypted the data and you on the keys there's not much , people can do. emily: where do you see aws and -- in the next five years?
andy: we have been saying this for a while, i think we see it bear out in the market. of computingrity is going to be done in the cloud. -- very fewpanies companies will own their own data centers and they will have much smaller footprint. all of this is moving to the cloud. i think we are in the beginning of this shift. you can expect a lot of geographic expansion from us you , can expect huge investment and continued substantial capabilities of machine learning and ai and connected devices. i think the database space is radically changing in this world. customers are fed up with what has been the case the past couple decades. i think they want database freedom. our databaseurora,
engine, is the fastest-growing in aws. i think voice will be increasingly larger percentage of the total applications out there. emily: my exclusive visit there with amazon web services ceo, andy jassy. nike is selling shoes on groupon. they are having a 48 hour sale with discounts of up to 40%. nike sales in north america fell 30% last quarter. the sneaker industry needs sales to move product. the competition among cities to secure amazon's second headquarters heats up. we will hear from the washington governor. how they keep talent in the state. this is bloomberg. ♪
emily: a new milestone for bitcoin. the cryptocurrency rose to a record, smashing the $5,000 mark. recently as december, bitcoin was trading at recently, there $1000. were reports that china would ease regulations on bitcoin. cities across the u.s. are ramping up their campaign to secure the location for amazon's second headquarters. initial bids due washington october 19. governor jay inslee knows what it takes to keep tech firms happy in his state.
they talked about how washington learners tech talent to the state. >> this is a signal of amazon's incredible success. they are growing faster than any other corporation in world history. they are still adding another 6000 jobs in seattle with hundreds of square thousand feet so the growth will continue in washington state. this is a signal of their aspirations and ambitions and growth curve that geography is an issue. it is not shocking to us that such a rapidly expanding his nest would be willing to look at some other options, but our state is going to suggest locations for them and there will be proposals from a variety of communities around our state in the event that they see washington as a potential option. one way or another, our state is
a perfect place for them and i think some proof of that is their success, to date. when you look at the growth here and what is to come, is there advice you would share with other governors on how to manage or a track such a large and successful company? gov. inslee: we have a strategy in ourhnological growth state, which is succeeding not just for amazon, but google and facebook, expedia, microsoft. we have a whole host of companies that have had rapid expansion. that is the several pillars of our strategy. one is the development of intellectual talent. we know the number one recruitment tool is intellectual talent to make it available and help it grow. that is why we have been focused on growing our computer science programs and graduation rates in our schools.
secondly, we have an open door, welcoming approach to welcome talent to our community. this is a secret sauce that we have welcomed smart people from other states and other countries to be able to help build these companies. and that has been very attractive to develop the nucleus of an ecosystem which then continues to build, once you hit critical mass of intellectual talent, which we clearly are. what we have learned is, that these companies and industries cross pollinate. working inscientist the narrow industry one year, and biomedical the next. andave that critical mass it feeds on itself to grow these businesses. we also have smart approaches about policies, a light touch from a regulatory standpoint. it is one of the reasons we have almost have two dozen companies working on autonomous vehicles right now because we've had a , welcoming approach, regulatory
light touch, so these companies can grow their new technologies revolutionary stride forward in our transportation sector. we also have a perfect place to live and enjoy life and we are now in a recruiting battle. there is no better place to recruit talent. someone can come to washington and ski and sale in the same day, enjoy a beautiful place with clean air and clean water. a cosmopolitan culture that embraces foods and music from around the world. it is a great pace to recruit a 23-year-old computer scientist. that is one of our secrets of success. emily: that was washington governor jay inslee speaking with our news reporter. airbnb is getting directly involved in the real estate side of the business. they are working with a miami-based developer to design an apartment building that will carry the airbnb name.
emily: the chinese government is looking to gain a stronger foothold in some of the biggest tech companies in the country. beijing is seeking a stake in companies like tencent, among others. this is according to a report in the wall street journal. they are looking to obtain 1% stakes and a management role. these special management shares were presented in a draft proposal in 2016. joining me to discuss, selina wang.
we know the chinese government already holds a powerful sway over these companies. how is this different? selina: it is getting even more powerful and more of an entrance into these large tech companies. some observers find this concerning because these are no longer media companies. the chinese government has historically taken a position in companies. but in media companies they have mostly erred on the side of censoring content. that is something we have really seen happen over the course of this past year. taking a board seat, that is going further than what most people have expected. it is unclear how much it would -- how much of a say it would have in business decisions. tencent has data in the world of health care and transportation. these are not just media companies. is tow xi jinping's goal control the message and content
on these platforms. is the socialp messaging service that was blocked. how does this fit into the broader chinese government's efforts? is it only something they are doing ahead of the communist congress party meeting coming up? selina: they say this is the new normal, the new xi regime. he is taking the chinese government and establishing a persona, cult-like leadership of the country. crackdown, whatsapp live streaming apps have closed. there is a regulation that bans women from eating bananas on live streaming. emily: interesting. quite far ins gone a concerted effort to clamp down on these companies. emily: i spoke with the baidu president and said it looks like it is going in the opposite direction when it comes to the
chinese government. look at what he has to say. when you see a region, there are regulations, policies that any company needs to abide by. emily: i pushed back on that a little bit. it seems to me that people are -- that things are going in opposite direction. how likely is it that this proposal for management shares will go through? selina: we have had that discussion since last year, it is an advanced stages. the exact methodology is not quite clear. how are the shares going to be purchased? is it through a special fund, state-owned media enterprises? how much of a control will they have, aside from constant? there are still a lot of questions hanging in the air. it is definitely a headline risk going on. no matter how successful they are, they cannot predict what
regulators are going to do. there is always a gray line there. emily: when we ask them publicly they say we have to abide by the law. to chinesen we speak executives on background to they say, yes, that is the law. there is not much you can say against it. but it is a gray line, there is ebb and flow. at this point in time it is easier to follow the rules and not push back. but maybe things will go the other way again. the overarching theme of xi jinping, there will be stricter crackdowns. and for companies like facebook and google, do not even try. emily: selina wang, thank you for that update. thank you for watching this edition of "bloomberg technology ." tune into friday's show with our .iscussion
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