tv Bloomberg Technology Bloomberg October 30, 2017 5:00pm-6:00pm EDT
paul manafort and a former business associate were indicted have nothing to do with president trump and everything to do with presidential rival hillary clinton. the white house also pointed fingers at a research firm that produced the dossier about trump's alleged ties to the kremlin. manafort's attorney addressed reporters a short time ago about today's indictment. >> i think you all saw it today that president donald trump was correct. that theno evidence trump campaign colluded with the russian government. alisa: manafort's next court appearance is november 2. prosecutors want bail set at $10 million. the fbi's report lee investigating the controversial $300 million contract for rebuilding puerto rico's power grid. the contract went to a tiny company based in whitefish, montana. the hometown of interior secretary ryan zinke. global news 24 hours a day
powered by more than 2700 journalists and analysts. this is bloomberg. bloomberg technology is next. ♪ ♪ emily: i'm emily chang and this is bloomberg technology. facebook's flawed fix providing misinformation. the social media giant could be forced to go back to the drawing board with less than 24 hours to go for the start of silicon valley's big week on capitol hill. the telecom deal to merge sprint and t-mobile could be placed on hold. we run through the sticking points and discussed the potential impact on the industry. a leadership void at samsung.
the korean giant is on track for another record quarter, but who is calling the shots? we will find out the search for the new chief executive. first, facebook, twitter and google lawyers will be on capitol hill this week and faced questions about russian interference in the 2016 election. face facebook's lawyers lawmakers, the company struggles and fighting fake news. at the moment, that social media giant outsources the process to fact checkers. thatloomberg has learned partners say the process is too cumbersome and will not make headway on stopping fake news. joining me is sarah frier. bob o donnell. sarah, great piece today detailing how facebook handles
fake news and how that process has evolved. talk to us about how today facebook is handling this process. sarah: the process is still very humid. -- huamman. they have a way for people to flag fake news on their website. if enough people flag a story as potentially false, it will end up on a dashboard of these back-checking partners' sites. can look at this dashboard and link by link click if it is true or false. two they do that, if organizations mark something as false, it gets a disputed flag on facebook. there are so many duplicate links about the same false story, by the time you debunk one of them, it has appeared on 20 other websites. checkers have told me how tedious this process can be and how they feel like they are probably only scratching the
surface in terms of the fake news that is out there. emily: is facebook reevaluating this process? what is facebook's approach now? sarah: it is most important that they don't rush into a technical solution because they don't want to create a system that would be inherently biased. they don't want to be the arbiters of what is true or false. facebook is happy to have these fact checkers create patterns through this system. the more that they check, the more information goes into facebook's database on how stories are not fake and they can flagged them more quickly. basically, facebook's main priority is speeding the process up because it can take up to three days for a story to get debunked in this process which is just not fast enough. even so, if a story is
debunked, research shows that he can have little effect on the people that have are ready read that story. bob: this process is clearly so broken, it does need to be thrown aside. whether they will do that is not likely. the fact is they need to think about themselves as a news conglomeration. instead of blacklisting the bad things, i think they need to really say we have to white list stuff that is ok. emily: they tried that last year. bob: i know. it is a fair point. look, there is no great and easy way to deal with this. the fundamental issue is you can't expect the crowd to be editors. people are editors because they train and how to do that. i don't see how that works. emily: facebook is saying this is just one prong. prongs? the other sarah: they are trying to do news literacy programs prongs? sarah: they around the country, around other countries as well.
they are trying to think of ways to present information with more context because one of the is on people's newsfeeds, they see what their friends share but not seeing things from another political perspective. it is a situation where they will have to try many of these things before they come up with something that is long-term is on people's newsfeeds, they see what their effective. it will all be very resource intensive. emily: clearly from your facial expression, that is not enough. bob: no, i think they have to rethink how they structure the news on the page. where does news from outside sources up year within your newsfeed as opposed to information everybody gets from their friends? if it is about restructuring, maybe trying things they have done in the past but if you put content in different places, people have to think about it in a different way. effective. you cannot teach everyone how to properly read the news. emily: clearly. sarah, you are walking into
these hearings later this week. what are we expecting to hear? sarah: the companies will come and explain how their systems work first of all, because i think at least among political lawmakers, they may not understand how these systems are very difficult to screen for this kind of activity. then they will try to explain they have done a lot of work and they are going to basically say that they are very intent on making sure these problems don't occur in the future antitrust tom and build up -- and trust them and build up a relationship to make it seem like they are very proactive so legislation does not come down on a harmful manner. facebook has said they are willing to work with regulators, but what shape or form that will take really depends on how these companies come through these hearings. emily: is legislation the answer here?
government intervention? bob: i am not sure it is the answer but at the same time i don't think it hurts to have some kind of mandate and some kind of controls in place about more transparency in the way gathered and the sources provided as well as the advertisers. that has a huge influence as provided as well as the advertisers. that has a huge influence as well. the organization of events and other things recently reported. emily: we will be covering these hearings all week long. bob, you are sticking with me for the hour. sarah frier in washington for us. i know we will check in with you regularly. thank you for stopping by. another day, another record for bitcoin. it has surged past $6,000 earlier this month and now a market capital of over $1 billion. the market value is over $100 million. it is well ahead of its rival,
with a cap of $29 million. currency prices have been unfazed by recent regulatory crackdown and skepticism from warren buffett and jamie dimon. coming up, a stellar earnings companies.tech we break down the highlights. bloomberg technology is live streaming on twitter. check it out. this is bloomberg. ♪
launch for spacex. companies a 16th launch of the year carried a korean satellite into space. the launch will replace an existing orbiter. it launched successfully for reuse for a future mission. have to companies of the s&p 500 have reported earning results for the last quarter. amazon stock trading above $1000 a share. plus, apple and facebook trading at record levels ahead of his earning release this week. bob o'donnell is still here as our guest host. what do you make of the amazon running away with the show? bob: the amazon numbers were incredible because everybody expected because it is q3, building up their warehouses in preparation for the holidays, that they would take a hit. saw modest profitability on the
retail side and aws continues to kill it for them. all the other interesting businesses. ae thing about amazon is really want to drive people towards prime and other services. they are doing all these interesting things. they put out their key service which is a little controversial. interesting and trying to address a problem that some people have. to say look at all the different services we will be able to bring to you. one thing that gets people hooked, that is much better than the hit and miss of the holiday season. one analysis shows u.s. corporate leaders are more worried about amazon and what it is doing to its business than any other factor, including the washington. obviously, other retailers, it makes sense but what about all these other businesses? who should feel threatened? bob: the washington. logistics companies.
amazon is building their own systems. you have to pharmacies potentially. they just got approval to do deals -- not drugs, but prescriptions. obviously, groceries. they are really extending their reach. content, delivery -- all these kinds of services. almost people pay for on a regular basis they are going after. emily: moving ahead later this week, we have apple coming up. we have been talking about what is happening with the iphone 10 and the iphone 8. we will not see any of that in this quarter. what are you looking for? bob: the big number everybody is looking for will be the calendar q4 forecast because that will give us the first hint of what we can expect on iphone 10 to make. everybody is talking about the fact five to six weeks, great demand.
either great demand, short supply or realistically, a little bit of both. not playe 8 story will itself out much in the last quarter. everybody has seemed to written it off. all of a sudden, the markets have decided we will go three quarters ahead for apple. all of a sudden, now it is ok? emily: do you think the iphone 8 could see a bump in demand once users are able to hold the phone in their hand and say do i really want to pay $300 more for this or not? bob: i don't think so, and the reason is the people who see the 8 and go this is nice, i think i will gravitate back to the 7, because it is less expensive. the thing we have not seen with the iphone 10 is once all the apple fans spend their thousand dollars on the phone and we get to regular people, i am not convinced they will go $1000, no
problem. i think they will go back and 7 is not so8, 6 or bad, so i will upgrade. i don't know. they could charge $2000 and people will pay. emily: any concern about -- bob: it is way too early to say. one phone, one person -- too early to tell. obviously it needs the work. emily: facebook coming up. some big stories to deal with this week, but it also happens novemberearnings on 1. bob: i think they will be fine this time around. november 1. i think they will show their influence is extending. from a financial perspective, i think facebook is fine. questionin?erm
question will they have to be thought of more as a media company and therefore more regulations on how ads come will that slow down the rate of growth? and all the other things they do traditional media companies cannot get away with. emily: bob o'donnell is sticking with me for the hour. coming up, are tech traditionals cannot get away with. emily: companies getting so big that the government needs to step in? find out what the ceo of one of amazon's competitors thinks. this is bloomberg. ♪
emily: gopro has cap to one big name in sports to serve on its board. it has named golden state president on the board saying his leadership and passion has made him one of the most respected individuals in the nba. he was one of the first partners to try the virtual-reality video. welts will be the eighth board president on the board member. while lawyers for facebook, twitter and google will appear at capitol hill tomorrow to answer questions about russian meddling in the election, one company that will not be there is amazon. it could raise antitrust questions for the e-commerce giant. earlier on whether it needs to
regulatory oversight on big tech firms. certainthink so to a extent. if you are looking at the position of amazon, the fact they can file a simple trademark applicationmember. and have an entire market react with billions of cap loss, i think there needs to be something to that. whether the market will eventually say it is more bark or whether that is a legislative action, we will see in the future. >> do you see any evidence that isompany like amazon engaging in anti-competitive behavior? is engaging in anti-competitive behavior? >> i don't see anything of what they have done in the past. it is well documented in brad's book on their past acquisition practices. but now, it is a conundrum but you would say they try to lower prices, inject more competition,
yet they have the ability to move markets solely by themselves. right now in a vacuum, potentially no. but when you look at their m.o. and the past, now tbd. >> 55% of all project searches begin on amazon which has surpasse google. that is something that has a lot of unwanted attention on amazon. how do you raise your company's profile in this environment? butes, they are dominant there is market share for the rest of us. ship toilet paper, large-format anywhere in the u.s. but a big part of our business is actually business-to-business. bloomberg,en room in there are hundreds of different snacks for everyone here to eat and enjoy. certainly the folks that stock that pantry are not going on
amazon and clicking on pop chips 400 times. not as for us, amazon is strong and we are going after it. >> you said some of your best customers, populations with 50,000 people, may be less at times. just to bring back exactly to what you are saying -- do you think that insulate groups from the likes of amazon because of bit of care? -- because they don't care? >> to a certain extent, but it offers more opportunity for folks like us. there is opportunity out there whether it is in the city or out in the rural areas. the u.s. doolks in not live within a 30 minute drive of costco. whether they like it or not, it does not matter because though the brand is ubiquitous, the
locations are not. that is why we have been able to grow so quickly. $40,000 in sales in 2014 in my garage and last year, over nine figures in 36 months. there is opportunity but you cannot keep your eyes off amazon. >> what do you think you do better than amazon now? what have you adapted that are at? -- better at? >> we have a really good ability to focus on the customer. our customer wants wholesale. amazon wants to be everything for everyone. for us, it is really tough when you get a single person living in a 300 square foot apartment and say boxed is not for me. that it isis a myth not for you and only for large families. that has been really difficult for us to concentrate on, but i feel like we do wholesale better than amazon because we can sell
different items and different sizes that amazon cannot get their hands on. quick, you have automated your warehouses and not lost any employees. is that sustainable if you scale that up? >> i think it is sustainable. i think the reality is folks will need to be able to work with those robotics in order to keep those positions. we did not lay off anyone solely because of automation. we retrain them and we feel like they have learning power over their career. emily: that was the boxed ceo earlier on bloomberg television. the future of sprint, t-mobile and a merger may be in peril. we will examine if the deal will be shelved indefinitely. if you like bloomberg news, listen to us on the radio. you can listen to us on the bloomberg app, bloomberg.com.
so all you pay for is data. see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit, or go to xfinitymobile.com. >> you are watching "bloomberg check of your first word news, the white house is distancing itself from former trump campaign chair paul manafort, who was indicted.
>> there is no intention or plan to make any changes in regards to special counsel, but today's announcement has nothing to do with the president, has nothing to do with the president's campaign or campaign activity. the real collusion scandal, as we have said, has everything to do with the clinton campaign and russia. manafort pleaded not guilty. prosecutors want to bail set at $10 million. foropen enrollment obamacare begins wednesday. that is after the trump administration scaled back the loss. it ends on the 15th. the administration is slashing advertising and limiting funding for counselors and canceling the subsidy that lowers consumer cost, which will raise premiums. one last kenyatta week's election. it was boycotted by the main
opposition group. got 98%s say kenyatta of the votes cast. china says the u.s. must not interfere with ongoing negotiations to establish an official code of conduct in the disputed south china sea. the country's ambassador to the u.s. says washington has no territorial claims in those waters. president trump leaves this week on a five nation trip to asia. global news 24 hours a day, in more than 120 countries. this is bloomberg. it is just after 5:30 in washington dc, 8:30 tuesday morning in sydney. we are joined by paul allen allen, who has a look at the markets. underway inding is new zealand. the index is showing strength in these early moments, up 1/10 of 1% despite u.s. equities closing weaker. down.utures pointing
the bank of japan holds its policy meeting, but no change expected there. the jobless rate is out for september. expected to hold steady at two point 8% while industrial production is expected to contract 1.6%. asx futures looking flat, iron ore slipped 2.2%, now the low $60 per pound after local authorities in china ordered a and thepalletizing facilities. samsung's third-quarter earnings, watching apple profit. more from bloomberg technology is next. ♪ >> talks to merge sprint with t-mobile could throw the jet
deal -- the deal into jeopardy. shares of both companies tumbled. they have been unable to get past differences over valuation, and nikkei reported that soft rank will propose ending the talks as early as tuesday. still with us is the president of technology and research. alex sherman in new york, and from l.a., our bloomberg news editor, who covers telcos. i will start with you. what is happening right now? >> everything is happening and nothing is happening at the same time. deals talks have been going on they have hadd discussions about valuation and to will control the combined company. the point of the exercise has been to take the number three carrier, t-mobile, and the number for carrier, sprint, and put them together to create a
bigger third competitor against at&t and verizon. carriers in the u.s., which was v.a. a big deal for everybody involved. it would provide the resolution for softbank, sprint's owner, the japanese company, whose owner has been looking for a way to address the promise sprint has. it continues to move money and -- lose money and hasn't done great with subscribers. it was supposed to be the final resolution in his investment in the u.s. and now, everything is up in the air. going the talks of been on for months. talks of a potential deal have been going on for years. talk to us about what is happening right now. what are the major snags? >> the valuation question that creighton mentioned has been a potential obstacle for a while, really since these two sides
started to get into discussions about hammering out a deal in early september. since then, both sides have been doing due diligence on each other, and sources have told me consistently that valuation may be an issue, particularly around this time, because we have really hit sort of the endpoint here before a deal was going to get announced. we have reported several times that besides got close to a deal, then delayed them. initially, they were trying to get a deal done when the companies reported earnings. pushedrted that would be to mid-november. now, the idea talks may have hit a snag indicates that it is wasible deutsche telekom asking for too low of a price, meaning the exchange rate, how many shares deutsche telekom would pay to softbank, or t-mobile, pay to sprint because
that where the -- that's where wouldrger would happen, be too low. another words, they would want to pay too little of an amount of money per share of sprint. that may be the snag we are talking about. softbank may have said, if you are pushing for that low of a price for sprint, we are not going to do this deal. we may know more details in the coming days. of the big questions on the valuation of telcos is around spectrum. both sprint and t-mobile have been recently getting -- interesting pieces of spectrum. you think that has anything to do with this? tothe fundamental reason pursue a deal at all. if you look at sprint in today's iteration, there is no reason why t-mobile would want to merge with rent. -- with sprint. it has been a money losing entity for years. the theory is that t-mobile ,ould use sprint's customers
and more than that, it's spectrum for a 5g world. the logic hasn't gone out the window here. it is just that the two sides can't meet on valuation, and if they could pursue other routes. it doesn't change the big picture that putting these companies together would make them stronger in a 5g world against at&t and verizon if in fact that deep -- that deal was allowed by regulators. emily: creighton, let's say a deal doesn't happen. what does that mean? the next question. first, you have t-mobile, who has had a great run. they have been gaining subscribers for years. to,prophets have continued profit margins have continued to expand. everything is going right for them. that is why deutsche telekom has acted like they have a position
of strength in these talks, they should be the ones to control the company and they don't need to pay a premium to sprint because their company is doing better. there is no reason to think that wouldn't continue, and in terms of spectrum, they have what they need for the near future. as far as the far future, who knows. when there is more demand for various 5g services, that is why they would like to have more spectrum in the sprint deal. and more subscribers and more market share. or sprint, that is where the question comes up. will softbank put more money into sprint to develop a network? i would ask that if i was a softbank shareholder. itsnt has basically cut off cap for the last few years. it hasn't invested much in its network. it has been doing all sorts of things, also innovations to make the network work better but autumn line, it will have to play catch-up. emily: what happens next? >> great question. it is hard to believe from my
perspective that sprint and t-mobile would've gotten this close to a deal, only to have softbank pull back and get cold feet about issues of control. it seems illogical, like, why would you have gone this far? these companies have been thinking about this for months. is it possible that this is all a big negotiation strategy once more from softbank to get t-mobile to budge? nikkei isf, as reporting, softbank comes out tomorrow or even today japan time and says, we are pulling back publicly, that is a big step to walk back from. you would have to imagine that at least the discussions would be put on hold for the near future if softbank does say that. alex, creighton, i know you will keep us posted. our new steam is working -- our new steam is working on this. clear the last hurdle to buy level 3
communications, sending shares of both companies higher in the session. the fcc approved the 34 billion dollar deal, which will create a bigger competitor to at&t in the business internet market. coming up, square targets larger merchants with its later -- latest projects. could it be a game changer? this is bloomberg. ♪
include a customer facing screen to buyer -- for buyers to see what they are purchasing. square has aimed to attract larger customers with its services like loans and inventory management software. my guest is president of technology research, bob o'donnell, and selina wang, who attended today's event. you got a chance to speak with the ceo, jack dorsey. what did he say? >>. for him, he sees this as a game gender, something that is really going to be a reason for large sellers to join square. they know longer have to rely on an ipad. now, square is offering an out-of-the-box package that provides a countertop register, a front facing customer screen as well as their software already integrated. a key point to many sellers is that they had to use an unprofessional consumer device,
the ipad, and had to constantly update it. -- this way, it comes right out of the box. emily: you worked with many of these companies. how do you see square fitting into the larger competitive environment? >> it is a nice option. servicesion of all the is what a lot of small retailers want. you have the big cash register they have done these point-of-sale terminals in the big malls, if you go into gap stores, four years, they have had that stuff. this is a nice entry for square to get into it. it is more about services and the ability to do that, and it is a minor convenience to have both screens available, but an important step that allows them to open the door to other services. not to make a lot of money on that hardware. emily: how does this fit into the larger vision square has, the loan business? mentioned, this will
not be a signature revenue driver for square. their vision has been to serve hardware up cheap, and provide them all of the software services. something jack said over and over is that they want to grow with their sellers, so they started with the smartphone food trucks and tiny one person sellers. as the seller grows to multiple locations, square wants to be there the whole way. as the company has developed, so have their sellers. in with theirits loan business. they applied for an industrial loan charger, which would be a big deal for capital business to reduce costs. this isn't going to necessarily mean they will all of a sudden take business away from big players. but it is a great product to up sell their existing seller base. having spoken with jack dorsey today, this is a big week for twitter.
the company will testify on capitol hill this week. did he say anything about that? >> i said, just tomorrow, your other company is going to be testifying. he was very reticent to say anything specific, but he said he is flying back to san francisco, feeling great. he says the company recognizes what they control and they are working on improving and it is quite a contrast to facebook, where mark zuckerberg and sheryl sandberg have both been on the phone with people in congress. seemed, on the surface, cool as a cucumber. we will see. the newhen will we see square hardware rollout? >> it is already working in some stores. i grabbed coffee at one of their locations in new york. it works simply and easily, and it is the first time they are providing this whole set. it is this kind of dark apple-looking device. they have been working on this
for a very long time to make it look as beautiful as possible. emily: selina wang, thanks so much for sharing that update. bob o'donnell, you are sticking with me. coming up, the show that helped establish netflix's original programming, "house of cards," is coming to an end. the show was netflix's first original hit, drawing millions of viewers come a spurring the company to produce dozens of other shows. the decision coincides but is allegation that kevin spacey made a sexual advance towards a 14-year-old many years ago. kevin spacey has apologized and says he doesn't remember it. a huge leadership shakeup could be in store for samsung after what has already been a tumultuous year. we will explore the top candidates to take over the company. iner another dramatic day
♪ emily: nintendo's earnings got a big boost from its twitch console. they reported profits of ¥28 billion. they reported their annual forecast after customers bought more games than anticipated. they predict they will sell 14 million switch units in that timeframe. samsung is gearing up to report earnings tuesday, forecasting a record order. there is one issue investors hope they will address. filling the top job at the tech giant. stephen engle joins us from hong kong to give us details on who is in the running for ceo.
bob o'donnell is still with me. walk us through the potential candidates here. a real turninge point for samsung. it has been run by the elder statesman for many decades, and of course, his son, the cochair, as he lee, is behind bars is appealing a five-year sentence for various bribery charges. list of a long potential candidates, and it will give us an indication of the type of generational change that samsung says it wants to do, because the current ceo is stepping down after the preliminary numbers came out a couple weeks ago. says the company and the conglomerate needs young leadership as it goes through this unprecedented crisis. you are seeing some of the names. ki-nam is proud -- president of the memory chip and
semiconductor unit. he is a lifer at samsung and really, spearheading their push into the next generation. his protege is a candidate, as well. he is a semiconductor engineer, a core member of cam's -- kim's team. he is an expert on de-rams. the other two co-ceos, shin jong-kyun is a little older, and oo-keun is older. they have a three-ceo system. they could ring somebody else from another minor division, as well. emily: what about a long shot? jay y. lee's sister, is she in contention? >> that will be the interesting question. she would be considered a
longshot, given the dynastic troubles, if you will, at samsung. she is not out of the question because samsung has been doing this for years. they promote from within and within the family. lee's sister, she runs a hotel group and has management experience. she is ambitious and very charismatic, like her father. i would say she is a longshot, given the crisis samsung is going through. emily: samsung reporting earnings tomorrow. have you seen evidence that the dramatic leadership issues have affected the company? and the bottom line? bob: not in the least. the way samsung is structured is an extraordinarily complex domination of companies. combination of companies. it is difficult for one change to dramatically shift things. at the same time, it is well respected within the
organization, so whoever comes into this role will have to be really good not only at knowing all these businesses, but at herding all these businesses. they are very distinct and run differently. emily: when are we expecting a decision? it, it: we could get will be later today when they break out there for the results, and we will get peppered. i'm sure senior leadership will be covered by journalists about successionhical planning, which has been disarray throughout the jay y. crisis. keep your eyes on one in particular person, known as the digital evangelist at samsung. for years, he has been easing the against hierarchical structure. he could rise to the forefront, although he wasn't necessarily on paper considered a front-runner. he is heading up the medical device unit.
he has a high profile and could be the one person who herds these divisions. emily: stephen engle, thank you so much. fork you, bob o'donnell, staying with us. great to have you. are under fire's for not being exactly accurate. compare apples styling of a cheeseburger to androids. you can see the latter puts the cheese on the bun underneath the patty. who does that? androids illustration of a beer stein leaves a large gap between the foaming top and the beer. says they will address on monday if folks can agree on the correct way to do it. the cheese goes on top. that's all i have to say. that does it for this edition of "bloomberg technology." we are live streaming on twitter.
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♪ >> from our studios in new york city, this is "charlie rose." . trump is oneident step closer to getting his tax cut. the house boded -- voted thursday to pass his budget plan. more on this i'm joined from washington by al hunt of bloomberg and also mike allen, cofounder of axios. happening within the republican party when you had some criticism of the president by jeff flake