tv Bloomberg Technology Bloomberg March 28, 2019 5:00pm-6:00pm EDT
♪ i'm emily chang in san francisco and this is "bloomberg technology." the day has finally come for lyft as it prepares to set a price for its shares before it hits the public market. plus antitrust lights shining on big tech. we speak to the louisiana attorney general for his take on what the state should be doing about companies like google and facebook.
the department of housing and urban development versus facebook. why secretary ben carson says the social network's ad platform is "just as discriminatory as slamming the door in someone's face." lyft will be the first to hit the public market if all goes as planned. in less thanists 24 hours. 2019, the yard so many highly anticipated tech companies plan to go public. among them, two stand out. a race best described as focused versus frenzied. frenzied being uber, engaging in rapid global expansion and itself driving cars and flying taxis. lyft on the other hand may be best described as focused. lyft grew out of cofounders
zimn green's and zimmer's ride, and focused solely on growth in the united states. going from less than a dozen cities in 2009 to 90% of the country in 2019. lyft claims it controls 39% of the u.s. ride-hailing market. it is just starting to go international, launching in toronto and ottawa city in 2013. it is getting in on scooters and bike sharing. and yes, it is also working on some driving cars, buying london-based blue vision labs, working on autonomous technology, beefing up the staff to 300 people. as it prepares to go public, it is trying to lure more, hoping to double its right account -- ride count to one billion in
less than one year. revenue jumped $2.2 billion last 2016,rom 143 million in with an estimation of 20 billion to $25 billion. was second out of the gate to launch, it was first in line to go public, weeks or months ahead of uber. in an increasingly volatile tech market, the hope is investors will hail lyft's ride. emily: i want to bring in bloomberg's eric newcomer, who covers lyft. what are we expecting to happen? olivia: we know the bank executives are setting the price. they have orders coming into the book, and take a weighted
average. you can expect it any minute now. they came out with a 268 price range, then upped it to 72. rumors are it could go higher than that. emily: why such enthusiasm given the company is losing almost half of what it is making? eric: people are betting on a story. it is the endpoint of the on demand conversation we have been having for a long time, are people going to switch to take lyfts and ubers more than their own cars? --y are hoping they jump investors hope they jump on faster than where the money is going to come from. there is no clear accounting how lyft will start to throw off cash. it is betting on this huge trend
continuing. emily: $72 a share at the height end. why do investors think that is justified? olivia: traditional stat revenues.do 10x i think what eric just said is right on the money, it is right they are buying into more than just looking at revenue. they are buying into this larger story of replacing car ownership. that is what lyft has been pushing. are millennials in this next generation even going to own cars? emily: these are the investors who are enthusiastic. what about the investors who are not so busy as to? -- so enthusiastic? what are they saying? eric: it will be interesting to see the company's short positions. it is difficult, if not
impossible to short them. i'm looking to see how skeptical people are. emily: we are getting some initial reporting about the present of the shares, but i will wait for a moment before we go with. olivia, in terms of what you have heard into the lead up to today -- you have been talking to investors, to bankers -- what is the prevailing view on how lyft will set the tone for these ipos to come? olivia: we can't put enough emphasis on how important this ipo is for others for the rest of the year. will really goes wrong, it indicate what might happen with uber, with pinterest. it needs to be priced just right. if the price goes below, that is a terrible sign too. everyone is watching what happens here. emily: what does this mean for
uber? there was so much enthusiasm, uber is just beginning this process and has the opportunity to press certain buttons based on what they see happening with lyft. eric: it is great for uber, because their story will be stakes, think about our international footprint, still in india and now the middle east, add on our autonomous program -- uber is cumulative approach. the valuation of lyft beginning is good. the question will be how much the two companies are spending against each other and how competition normalizes. those things, dependence on decisions lyft makes, could hurt uber. the big valuation would be great for uber. it allows them to say look, ours
is more than that. emily: lyft has priced its shares at the end of $72 a share. your reaction to that? olivia: i would expect them to go slightly higher than that based on conversations with investors today. it makes sense that want to be conservative. they don't want to leave money on the table. they don't want to have too much of a pop. i think it is right they come out at that price. eric: i am skeptical. they get to set the initial price expectations. i don't think we can read too much into the pricing games ahead of the ipo. what will matter is the value lyft holds over time on the public markets. seeing the numbers go up is good for the company, but i'm not going to read a ton into it. emily: cnbc reporting lyft pricing its ipo at $72 a share,
the high end of the range. we will work on confirming it ourselves. you get on it, olivia and eric. sorry to keep you busy on the shelf. u.s. department of housing and urban development set its sights on major players in the digital ad space. the agency led by ben carson accused facebook of violating the fair housing act with ads that can be targeted on the basis of race or religion. a spokesperson confirmed the agency has reached out to google and twitter to get more on their ad practices. more on this story later in the show. coming up, regulating google. the ceo met president trump this week to discuss wide-ranging concerns about the search giant. is it enough to keep individual states happy? we ask the louisiana state attorney general jeff landry next. if you like bloomberg news,
in our watches, our phones. i think it will be augmented and eight more important by using ai. >> we will see a fundamental shift in how they think about artificial intelligence and predictive models. when you can harness those two as a leader, it is an exciting time. on wednesday, president trump met with google ceo sundar pichai. according to the president's tweets, they talk about google's efforts in china and work with the u.s. military, as well as political fairness. a meeting the president said and did very well. despite the positive sentiment, google and its parent company off of it are targeted by lawmakers. senator ted cruz claims it silences conservative voices. bloomberg previously reported a group of state attorneys general are laying the groundwork for a
probe into google for antitrust and privacy concerns. i want to welcome the attorney general of the state of louisiana, jeff landry. thank you so much for joining us. i am curious what your reaction is to the president's meeting with google ceo sundar pichai, or his tweet about it, given the attorneys general have launched an exploratory probe into whether google breached antitrust and privacy concerns. a.g. landry: i was not privileged to the discussion the president had. i would guess it namely surrounded google's activity in china. i have not heard they discuss any of its practices as it relates to data mining, their manipulation of the digital ad space and content suppression, all of which you mentioned earlier. what we have our different
layers of problems all surrounding big tech as a whole. these are issues attorney general's around the country have been discussing for quite some time. this is not new to us. this is a discussion we have been having as we are not only the chief legal officer's of our particular states, but we are tasked with protecting consumers in each of our states. emily: what are the issues you are most concerned about, and what kind of action do you think needs to be taken? a.g. landry: i think all of the issues that have been brought up concern me equally. i would told you each of them have a different take. some have an antitrust avenue, others have an unfair trade practices avenue as well. we were set to discuss these issues with the ftc last week. that meeting has been postponed. my understanding is they are
rapidly trying to reschedule that particular meeting. when it comes to the digital advertising space -- i will give you that as an example -- could be antitrust and an unfair trade practice area. emily: are you part of this inquiry i mentioned where attorneys general are looking into whether google warrants a probe on antitrust and privacy issues? a.g. landry: look -- we have had a number of discussions with additional attorney general's on both sides of the aisle. we are looking at some of the same things, and additional issues where you mentioned content suppression as well. we are looking at big tech as a whole to determine what avenues may be appropriate to ensure consumers are protected. emily: google has responded to this preliminary exploration
saying "we will continue to engage constructively with state attorneys general on state policy issues." republicans and conservatives have historically not wanted to regulate big business. how serious do you think conservatives are right now about regulating big tech, and what makes this situation different from historical situations? a.g. landry: let's not confuse what google said. google as well as everyone else in the industry that collects data on consumers is concerned about the privacy of that data. that is not at all the bigger picture of what attorneys general around the country are looking at. the question to google is, what are you doing with the data, does the consumer know you are collecting on them, are they
getting a benefit, and should consumers be getting more from what you are collecting out of them? datap of that, is the google is collecting from the consumer proprietary to the consumer? that is one particular field. the next question is whether or not google is manipulating the digital ad space. are they controlling it in a way that would basically be unfair? when you look at the big picture in the digital advertising allow chase the ftc or goldman sachs to own the nasdaq? the answer would be absolutely not. yet that is exactly what google does in the digital advertising space. what do you think about privacy in particular and what rules states should -- roles states should play in enforcing a federal privacy bill? a.g. landry: when you talk about
privacy, that is a broad subject. are you talking about how individual companies protect the data they already have, or are you talking about being open and transparent with the consumer as to what you are collecting from them? emily: when it comes to political bias, then-attorney general jeff sessions called a meeting of you and your peers to talk about conservative bias on tech platforms. do you believe some of these platforms are deliberately subverting conservative voices? a.g. landry: i can tell you some of the actions i have seen on the big tech platform raise that particular issue. we have seen it time and time again where they have suppressed conservative content. m. report it to the we ask them about it.
it is always an apology from their standpoint. at some point in time when the mistake is made again and again, it becomes evident there is constant suppression. the concerns senator ted cruz has raised could be real. that is what we are hoping to find out. emily: speaking of senator ted cruz and senator elizabeth warren, elizabeth warren has advocated for the breakup of big tech. ted cruz said she has a good point. what you said about not wanting jp morgan to own the nasdaq reminds me of that. what do you make of their arguments to break up big tech? is certainly a possibility. i think it may be a road that has to be traveled on. attorneys general around the country are leaving tools in the toolbox in an effort to cure some of the problems we are seeing. we are talking about a virtual
marketplace the average consumer has a hard time wrapping their heads around. when you go to the digital ad space -- i will give you an example. i was trying to purchase a cover for a dog bed. he destroyed his dog bed. i didn't need an interest, just cover.ttress, just a when i went online, i found out they were out of stock and had to find a new bed. i went to the second and third page and found the cover i was looking for. the question is, is google purposefully doing that? are they driving consumers to more expensive avenues they are not exactly looking for? consumers have an expectation that when you search for a particular product, that what they are getting is quality, maybe quantity, and service. that is what we are trying to
determine, whether or not the consumer's expectation is meeting with eventually comes out of the search. emily: louisiana attorney general jeff landry, thank you so much, and for the explicit examples. appreciate you stopping by. coming up, amazon may have withdrawn from new york, but it has not stopped expanding. we discussed how the e-commerce giant is growing its texas presence. be sure to follow our global breaking news network tictoc on twitter. this is bloomberg. ♪
politicians in new york. tell us more about these new jobs. >> amazon very clear these are not jobs that were going to go to new york. emily: that was going to be my next question. >> they are hiring about a hundred people. it is mostly technology roles. -- about 800 people. amazon has been expanding at satellite offices around the country. emily: could this be another hq, or hq 2.5 in boston? matt: i have tried to close the book -- they have tried to close andbook on hq searches, instead would spread those jobs around their satellite facilities in the u.s. emily: do you think amazon has andned its lesson from hq 2
the fanfare around it? matt: we have not heard them assess what went wrong in a public way. emily: what does the expansion in texas mean? why austin? matt: austin has a pretty rich tech heritage. amazon has their biggest subsidiary in whole foods based there, so there are a ton of reasons for them to try to hire. emily: we are continuing to talk about government scrutiny of big tech. about have any concerns pending regulatory issues, whether it is senator elizabeth warren or the president himself? i know that gets complicated. matt: i have not commented on senator warren's statement. one thing we do see is their extension of their lobbying
effort in d.c., certainly being able to speak to antitrust concerns. emily: jeff bezos has gone in pretty cheap. latest not heard the scandal and his implication the white house might have been involved in the national enquirer blackmailing him. is that something we are going to hear? is that story put to bed? matt: there is always something new and crazy on that one. i would not rule it out yet. amazon and bezos has been interested in separating them from the country. ,mily: bloomberg's matt day thank you so much for stopping by. coming up, lyft maybe the second largest ride-hailing service, but first to hit the public market. we break down the company's
emily: this is "bloomberg technology." lyft raised $2.2 billion in its initial public offering, pricing its shares at the top of an elevated range. there is confirmation they priced the shares at $72 apiece, the high-end of the boosted range. it will be seen as a bellwether for other silicon valley companies. for more we want to bring in tim sullivan, a lyft investor. you must be pretty excited about this. >> we are certainly. fair why is $72 a share
for a company losing a lot of money? is essentially in line with the high-growth company, with the valuation of $25 billion. the company is still growing at 100% year-over-year. that is conservative. i think lyft has room to grow . emily: how much to the costs bother you? run anthink lyft has extremely capital efficient business. part of that is due to uber's paving the way, so to speak, and lyft being able to draft behind them and execute per their vision. i think they will continue to do that. if they can crack the insurance nut and other things, you will
see profits sooner than anticipated. emily: what about marketing and customer acquisition? i have been on the receiving end of deep discounts from lyft and uber, it seems like every other week they are offering 30% off. tim: i think heading into ipo season, both companies are spending a lot of money on marketing, trying to get ridership up and driver levels. i don't know that line item will be consistent and sustained. i think those discounts will start to wane as we move forward. emily: there is a story lyft is selling that it will replace car ownership for millennials. there is on the other hand, we will replace drivers with self-driving technology. in a way, that seems at odds with the other idea that they are getting jobs to all of these people who can now work flexibly as a result.
tim: lyft's mission is more along the lines of transport as a service as opposed to ridesharing. i think the autonomous car is further away than people thought. in six months, san francisco will have autonomous cars everywhere -- that didn't happen. there are a lot of technical roadblocks to get over before it is considered reliable and safe and adopted on a large scale. it is not around the corner. emily: how far away is it? you are saying the opposite of what another uber investor told me thisk,eldriving is closer than we think. he said three to five years. tim: three to five years is not around the corner in my opinion. that is a reasonable assumption, but it could certainly be more like five to seven.
given that, a lot of things will change in the meantime. emily: like what? tim: as you mentioned, car ownership is declining with millennials. who knows what will happen with the next generation. i think the service industry, in all its iterations, ridesharing -- the ridesharing economy in general i should say, are changing our world environment in ways we have not considered two years ago. emily: what will you be watching for tomorrow? tim: i will be looking for a nice pop up on the open. i saw one of the finance shows this morning say it would come out with first trade at 100. i would be thrilled if that was the case. i will watch for high-volume, like everybody. 32.5 millionricing
shares apiece. still giving the company a $22 billion valuation. do you think among other tech fairrns that that is a valuation of the company? tim: you have to go back to the fundamentals of lyft and look at their revenues and their growth and expenses and model it out against industry comps. you will find for lyft specifically, that is a fair valuation. if you apply it to other companies, you will have a different result. emily: do you invest in public companies? tim: no. emily: so you would not be buying more shares. tim: that is not our model. we are private company focused. we hold through the ipo and then some, but we are not public market investors per se. emily: what is the next step?
you have a lot of silicon valley companies going public this year. now you have to find new horses to bet on. tim: there are plenty of new horses to bet on. we are looking at opportunities on a daily basis. emily: like what? tim: right now, there is a company in the concussion protocol space. they are widely adopted in the ncaa and other spaces. they are changing the game as far as head injuries go. we are excited about the prospect of that company. emily: tim sullivan of oceanic partners. i know you will be watching very closely tomorrow. do not miss our interview with lyft's cofounders 9:45 a.m. eastern time tomorrow. i will be speaking with them in person right here on bloomberg television and bloomberg radio. coming up, facebook under fire for its ad targeting practices. we have all the details next.
emily: facebook is already the target of the federal trade commission for privacy violations. on thursday the u.s. department of housing and urban development says it is charging the social network with violating the fair housing act, allegedly. hud says facebook did so by restricting who can view housing related ads on the basis of race and religion. here is what secretary ben carson said. " facebook is discriminating people based on who they are, where they live, using a computer to limit a person's
housing choices can be just as does khamenei territory as slamming -- just as discriminatory as slamming a door in somebody's face." for more we have naomi who covers tech in washington, as well as selina wang. facebook has reacted quite strongly to the lawsuit, saying they are very disappointed. >> it has definitely caught facebook off guard. last week they settled several lawsuits with the aclu, the fair housing alliance, saying they will overhaul their ad platform so advertisers of employment would not be able to do this micro-targeting on the basis of areas like gender and sex. hud is arguing that does not go far enough and are charging facebook still allows these discriminatory ads to exist. they allege there is the ability for advertisers to target where
they live based on drawing a redline around areas. alleging facebook uses online and off-line data to figure out with machine learning what these characteristics of these people are based on these protected groups, like the basis of race, even if they are not e groups. emily: facebook says it has taken significant steps to prevent a determinationd. last year we eliminated options that could have been misused. we will continue working with civil rights experts on these issues. by the way, facebook couple weeks ago changed a bunch of their atd targeting practices because of complaints around these issues. they say they worked with civil rights groups to make those changes, which is why facebook seems so caught off guard. why is hud taking this action?
naomi: i think it is another symptom of washington regulars continuing to ask questions about the social media's targeted advertising policies. now that democrats have taken control of the house made it clear they are intending to seek more answers to questions about whether targeted advertising on facebook or other social media companies is discriminating against minority communities. it is clear washington, as the hud secretary made it clear in this move, but washington in general is putting the heat on facebook. emily: when you look more closely at the categories that advertisers were allowed to tick - parents, non-christian, interested in accessibility and hispanic culture. it is interesting thinking about what was going into these
products decisions by facebook and why they thought this was a good idea. selina: it is just an, because these policies are only as good as their enforcement. clearly there was some sort of data mechanism going on that told them these are interesting targets to group that would be beneficial to advertisers and get them more clicks. clearly there is a reason why they those groups. emily: you can also exclude those groups by not targeting. selina: exactly. anyone on facebook right now can go and make an ad. you see there are dozens of behavioral and income categories you can pick. the trust is put on facebook that if you arguing -- you are doing a housing related ad, thei r moderators will catch that. emily: the government has reached out to google and twitter about their targeted and
practices. westatement from google, " have had policies that prohibit targeting on sensitive categories like ethnicity, disability status, negative financial standing, etc. our policies are designed to ensure users are using our e safe manner." are there indications google's practices are vastly different from facebook and how the government will proceed? naomi: google says it is not discriminating in the same way, but it is clear google has not also been as open with its algorithms and behind-the-scenes mechanisms it uses to determine its advertising. more access to that information has been a top concern in washington. i think it remains to be seen whether there are ways google isn't certifying internally those advertisements are compliant with housing
discrimination law. emily: something we will continue to follow in washington to see how this will unfold. selina wang and naomi nix, thank you both. google is facing growing backlash over a conversion therapy app in its play store. why the search giant has yet to remove it, next. this is bloomberg. ♪
emily: the popular gay dating app grindr is being viewed as a national security concern. according to a report from reuters, canadian investors in the united states has told a chinese company to sell the app. there is concern beijing could use information from the app to blackmail american officials.
joining us to discuss is isaac stone fish. this is a fascinating story. i had no idea the u.s. government could order china to sell a company. >> they are certainly trying. we don't know quite yet whether the company will try to sell grindr, which they should not have a problem to do so. it is a successful app. it really does point to fascinating national security locations of where the u.s. china relationship is right now. emily: talk about what the national security implications are. isaac: grindr is similar to the tech giant huawei in both of them are nonstate owned companies. huawei is privately owned. because of the relationship between individuals and businesses and the ruling
communist party, american security officials can't trust wouldn't giveer the data, the photos to the communist party if the party so desired. emily: so we are talking about very personal, potentially very explicit photos, data about users of this app. grindrplanning to lift publicly, but reuters is reporting they are shifting to possibly sell it out right. grindr is soliciting interest from u.s. investment firms. how do you expect this to play out? isaac: one of the stories said they are trying to sell it for double what they pay for, roughly $250 million.
i think it will work out well for beijing media. it points out well to where we are in the relationship today. when we think about grindr, china is far more advanced in facial recognition software and big data. you don't have to be that creative to think about what a potentially hostile foreign power could do with facial recognition and grindr. emily: you often see acquisitions stopped or scrutinized, but you don't often see acquisitions undone. how does this fit into the broader context of what is happening with huawei, with the u.s. china trade war that is ongoing? government ise trying to indicate is they will place their view of national security first. it is funny, because it is a nontraditional company for this to happen to, but i think this could chill other chinese or
american investors in working together. emily: we have seen president trump vacillate on his statements between the latest negotiations with china, seeming to indicate he wouldn't want to lift the tariffs. how is it being perceived in china most recently, and what is the chinese government telling its people? isaac: there was frustration after the summit with kim jong-un where trump walked away because he did not get the deal he wanted. some chinese officials interpreted this as a sign if chinese chairman xi jinping meets with trump and they said down and do negotiations, trump might just walk away, which would be frustrating for the chinese leaders. one of the things beijing is the beginning to its own people is a for whatot necessary
they are trying to do. i think one of the worries that chinese leaders have about the onde war is it hitting consumer confidence, and not necessarily in ways we can find numbers with. xi jinping is portrayed in someone who can do no wrong. he has not been able to have a steady and successful conclusion to this. emily: meantime, the ceo of google met with the top ranking military officer in the united states, met with the president. they talked about their concerns about google's potential work in china. google saying they will not launch a search engine in china. they have an ai office there that is seemingly giving them headaches. do you think the era of u.s. companies freely expanding in china is over because of this increased government scrutiny? freelyi hope the era of
expanding is over. martly expand in china. it would be good to use google and chinese. unfortunately the ruling chinese communist party will not allow google as it is to come in. it is good for the chinese google it is bad for to go into china. we are trying to find out what the new normal is. i think it is an open question. emily: isaac stone endorsement from the humans rights campaign, the largest gay rights group in the united states. the group is withholding google's perfect score on its corporate equality index until it removes an app tied to conversion therapy practices. it said "we have been urging
google to remove this app because it is life-threatening to lgbt youth." google declined to comment. tell us more about what is happening. >> this was a classic case of store and whether they policed it carefully enough. this app has been on the play store for a while. obviously this organization, human rights organization does not like it. it allegedly pushes conversion therapy, which has obviously been debunked in a letter circles. emily: we have seen employee activism at google. is this likely to push their buttons? -- iair: google's main don't know if vulnerability is the right word, but they are obsessed with hiring and retaining the best engineers. it will do anything in its powers legally to attain and
hire people. a lot of people in this field an want to work in divers and supportive workplaces. a rating from this human rights organization would be helpful for that. google is in a tricky place. a lot of its employees care about these issues. if it is not going to do anything, google might struggle to hire more people. emily: is this available in the apple app store too? alistair: the human rights campaign says apple took it down. apple is much more comfortable with pulling things from the app for specific reasons. google is very much supportive of free speech for the search engine and its app store. it is very tricky for google. emily: google has been criticized for failing to remove an app created by the saudi
government allowing men to track women. is it still available in both app stores? alistair: it was available in google's app store until recently. it is a situation where google close to have everything on the -- loves to have everything tore and not to take sides. emily: increasingly held responsible for the content it promotes and is on its platforms. alistair barr, i know you will continue to follow that one. a programming note, bloomberg's tom mackenzie has an exclusive interview with huawei's rotating chair later on friday. we are live streaming on twitter. follow our global breaking news network tictoc on twitter. we will be covering lyft's public offering tomorrow.
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haidi: welcome to "bloomberg daybreak: australia." shery: i am at bloomberg's headquarters in new york. sophie: we are counting down to asia's major market open. haidi: the top stories we are covering in the next hour. trade talks resume in beijing. the white house says there is no rush, talks could run on for weeks. dn tim sloan steps