tv Bloomberg Technology Bloomberg April 29, 2019 11:00pm-12:00am EDT
emily: i'm emily chang, and this is "bloomberg technology." coming up in the next hour, how will politics shape tech in 2019 and into the presidential election? we will talk with senator blackburn about her view from capitol hill. and first quarter revenue miss estimates as slowing ad growth. po roadshow kicks
off this week. can one of the world's biggest on one ofrs deliver the biggest public debuts this year? by as of alphabet down much as almost 7% now after the company missed on first quarter revenue. the parent company of google coming in below estimates. excluding traffic acquisition costs. this, as amazon becomes a bigger threat. google is spending heavily to fight hate and misinformation on youtube and facing the prospect of more information from lawmakers both in the u.s. and abroad as big and companies -- big tech companies in general are allowing their companies to be weaponized by extremists. i want to bring you highlights from a conversation with the alphabet cfo. first to talk about the intersection of tech and politics i would like to welcome senator marsha blackburn from tennessee.
you have taken an interest in tech legislation and i am curious of your broadview. what is tech getting right and wrong? sen. blackburn: what they are getting right is they provide an service people enjoy. and they have changed the way we conduct a lot of our transactional life. many people will say that is for the better. at theirwhen you look lack of privacy enforcement, and may i, emily, people are beginning to figure out, oh, they are data mining me, they are tracking, they are following, they are sending my information out. and they are big ad companies and i did not like that. i want them to only access information that i give them explicit permission to see. i don't want them following me and how is it they can monetize
my information, anonymize it back to their ip address, and then sell that information to the retailers? people have a lot of questions about this business model model and it is why they are saying it is time for congress to do something about privacy and data security in the virtual space. emily: so what should congress do when it comes to privacy? sen. blackburn: the browser act is my legislation, and that is kind of the benchmark, if you will, that people took from and said let's take from the browser act. this would require an individual to give explicit permission, opt-in, for sensitive data sharing and opt-out, for nonsensitive data sharing. it would be one set of rules for the entire internet system and one regulator, the ftc.
it is our nation's primary regulator in the virtual and physical space. emily: do you think europe and gdpr has a good model? sen. blackburn: i think it reaches a little too far, it is a little bit too restrictive. my preference is to see the internet remain a place where innovators can pop on and innovate. we have to bear in mind that the internet from 1995, no one ever thought about apps or mobility in the sense that we have mobility now, they never thought about the convergence of voice, video and data. and now you see that and it is all on a handheld device. you take it with you everywhere you go. and we need to make certain that individuals that are going to use that spectrum as their backbone that they have the ability to innovate, and we should not have laws that are restrictive that are going to limit new interests into the marketplace. emily: there have been growing
concerns from conservatives about social media suppressing conservative grooves -- views. president trump just met with twitter ceo jack dorsey. do you think social media is suppressing conservative views deliberately or not deliberately? sen. blackburn: here is what i think when you get into what people think of as depression or censorship, is the way they build the algorithms that are doing the data mining. and the question should be to facebook and twitter and these entities, do you subjectively manipulate your algorithm? and what we have to realize is in silicon valley, a lot of people have a more liberal bent. that is there preference. theybring that to work, are engineering and building these algorithms, and then they probably tilt left instead of
being down the middle, and we know they don't tilt right. emily: you actually had a pro-life ad that was taken down. they said it was inflammatory, they apologized. what have your conversations been like with the executives of these companies? they are lobbying on capitol hill. sen. blackburn: that is right. when we did a hearing a couple weeks ago twitter publicly apologized to me. the question is, how do we get to a point where pro-life language is considered to be inflammatory? that is the underlying question. why did they make that decision to block that and then it took them a while through conversation to put it back up? providers,ur edge this is the question that needs to be there. people want to know that if this is the new public square, they tohey are going to be able express their opinion and that the public square is going to be
appropriately monitored or regulated to keep out violence, to keep out terrorism, to keep out those things that do not serve the conversation well. emily: let's talk about that. there was just another shooting at a synagogue in california. some would argue that the platforms have done a lot to combat terrorism and isis, but have not done enough to combat white supremacy. what do you think? sen. blackburn: emily, there thisplace for hate speech, kind of action on any of these platforms. they are going to have to be diligent in making sure they deal with those things. likewise, many of us have spent a lot of time working on human trafficking and sex trafficking, working to shut down entities like backpage, working to make oftain that we tamp down any
the other entities that grow up. one investigator told me we stop to backpage, but then we have the mom-and-pop's that come up. we want to make certain that everyone, their information is safe online and we definitely want to make certain that our children are safe online. emily: now senator elizabeth warren has been calling for a breakup of big tech companies and she has gotten support on both sides of the isle. do you think big tech companies, apple,k, google, amazon, do you think they need to be be broken up? sen. blackburn: what we need to do is make sure they are responsible to the americans that are using their platform and also that they are not acting in a way that is not going to serve their consumers well.
we don't want to make certain -- we do not want an individual's private information to be made public. we want to make certain that data security provisions and reach -- breach notification provisions are in place. we want to make certain that individuals have the toolbox they need to protect their virtual users. -- virtual you. emily: would you say it is a step too far? sen. blackburn: i think it is something we are going to look at. i think it is important for us first to say here are the privacy rules of the road, because right now we do not have those. and here is the regulator you are going to be responsible to. and as someone who is a light touch regulator, i think that we need to do that first and foremost. then we can move on and do some other things. we definitely have to look at the censorship issue. we have to work with these companies on that issue. and if they are going to
consider themselves in news source, maybe they should hire a news director. emily: you have called net neutrality socialistic. what do you mean by that? sen. blackburn: when you put the government at the head of the pipe, if you will, that broadband pipe, and putting them in the first spot, that, we don't want to do. the internet is not broken. it does not need the federal government to fix it, if you will. so what we would like to do is make sure we preserve an open internet. we are all against blocking. we are all against throttling. what we want to make certain is that before we make a decision on prioritization, that we are talking with innovators. when you talk with people that are working in ai or working in health care technology, they will say, let's be very -- let's
move very slowly. when we talk about prioritization. because we don't know what the next innovation is going to be and how we are going to utilize those technologies as 5g comes into the marketplace. emily: you have been a staunch supporter of president trump. we know that senator biden has just declared he is running. he kicked off his campaign by talking about charlottesville. there continues to be the contention that the president did not handle that situation well. do you have concerns about biden or any democratic opponents? sen. blackburn: they are going to have their primary and they are going to go to that primary, they will choose a nominee, and then we will have that race. once they have chosen the nominee. emily: you are the first woman senator from tennessee. you supported the kavanaugh nomination. i know that mobilized a number of your voters. how much progress do you think
the me too movement has made and how much progress do you think still needs to be made? sen. blackburn: my hope is the me too movement has helped this to be a conversation that moms and daughters and employers and employees have. and i think it is a good thing that our children and grandchildren are not going to be fearful to bring it up when they have had someone acting appropriately to them. i think that is a good, healthy thing. emily: dads and sons need to have that conversation to. sen. blackburn: they should absolutely have that conversation. emily: last question is about the mueller report. attorney general barr is going to testify on capitol hill this week. what do you want to hear from him? sen. blackburn: i think that what you are going to hear from him, or what i would like to know, is how we got to that point. thatyou had this dossier was paid for by campaign funds and we used -- it was used to
get a fisa warrant. and how did we get into this in the first place. our concern should be over a culture at the fbi, a premier agency, that allowed individuals to think sucks -- such actions were ok. it is not ok. emily: it is not. do you want mueller to testify before congress as well? sen. blackburn: most people say that he did his job. when you are in tennessee and i am talking to tennesseans, they will say no conspiracy, no collusion. the one question they have is how we got to this point. how clinton participated, or her campaign participated in this. but emily, i will tell you, in tennessee they are talking about jobs, the economy, secure the border, when are we going to get broadband into our community, those are the questions they have. emily: senator, thank you so much for stopping by.
coming up, google feeling the heat after hitting a record high in monday's session. shares are tumbling after hours following a first-quarter earnings report. why amazon could be part of the company's problem. and if you like bloomberg news, you can check us out on the radio app. this is bloomberg. ♪
place consumers go when searching for new products but that has changed with increasing competition directly from amazon. that is not only in digital sales but increased competition in the digital ad market in general. joining us to discuss, colin. colin, what do you make of the overall takeaway here? margins getting smaller, revenue missing estimates and concerns about increasing headwinds from the competition. colin: first is 17% growth is not horrible. let's put that out there first. next is that the search ad market is maturing. this is something that google has been after for 20 plus years now. so this is something that is at a point where there are a lot of avertisers who are hitting point of saturation of diminishing marginal returns. the other thing happening here is amazon is now a much bigger part of the digital advertising
ecosystem. there is greater competition than ever before. if you are looking at this as an optimist you are saying to yourself, google is doing pretty well now that there is even more competition. if you are a pessimist you are looking at this as amazon is dominating product search. it is the number one place consumers go to research anything about retail products they are searching whether it is on or off amazon. and amazon is capturing a greater share of those search ad goods orrom consumer retailers that are selling on any of these market places whether it is amazon or walmart. that to me is a little bit of a warning sign. and really amazon is just getting going with their ad business. they did not have the greatest quarter, growing about 30% when we are used to 90 plus percent year on year growth. but they are really just getting going where most of the money is just coming from search advertising. they have a lot of runway to go. emily: they have been raining
and some spending. -- capex goingwn down. i have a chart which shows what is happening with margins. you can see margins getting slimmer over the last three quarters. i did speak to the alphabet cfo earlier just before the call got started speaking about the revenue miss. she blamed it on fx. she said the numbers reflect fx headwind. she said the year-over-year growth rate also reflects our strong 2018. a comparison off a strong base. in response to the amazon question, is amazon becoming a bigger and bigger threat because more consumers are starting their searches directly on amazon, she said we continue to do robust searches. how much ad is still off-line.
what do you think of those arguments? >> if you look at for this quarter you mentioned currency and comparisons. thatally there are saying tailwind is tapering. the way to look at revenue growth over the last three years, you saw they had changes for the product and the growth accelerated and now, we are seeing a deceleration. especially in paid click growth. has competition really kicked in? we do not think so yet but it is a warning sign going forward for this year. having said that i think it is more of a function of this tailwind of all the changes that were done and global search and youtube. so the expectations need to reflect that. emily: the ceo of google speaking on the earnings call right now talking about youtube, something we have not discussed yet, talking about how they are focused even more on quality content, getting videos off the
platform that should not be on the platform. what was interesting in my follow-up report she did not mention youtube off about -- off the bat. she talked about cloud. when i called her on that she said no, youtube is doing great. she talked about direct response, advertising, but they are not breaking up these numbers and it does not seem like there is a plan to break out these numbers. are you concerned about youtube? moderated this content will lead to increasing costs. collin: that is definitely hurting margins because it is such a manual, laborious process they have to do in order to maintain good quality content through youtube. but i am not concerned about youtube. you look at some data we have published, video viewing content is going to increase 8%. the number of hours people spend weekly between now and 2024 in terms of the number of hours people are going to be viewing video content. youtube is part of that.
i think as people view more video content you will have more advertisers that will go after those eyeballs, those people viewing the content. i am not super worried about youtube in terms of growth trajectory. it is more of the costs they are going to incur, unless they can automate this. maybe they are going to take that capex spending and figure out how do automate getting good, quality content and the bad stuff off. emily: we just heard senator marsha blackburn talking about her concerns for big tex privacy and google has been in the crossfire of some of these privacy issues and pending potential regulation. i asked her if she is concerned about the backlash against the tech and what she said to me is our mantra is we need to build for everyone and respect the user and opportunity and make sure we are addressing the needs of universe and all communities in which we operate, whether
that has to do with privacy or content. we should continue upping the bar on ourselves and that is the way we approach it every day. how much do you think analysts are concerned about coming regulation from capitol hill? we have already seen a big crackdown in europe. >> and the result of that was shown in earnings for this quarter as well. fines from the eu antitrust issues. we saw that with facebook as well. the fines are not the bigger concern for the market. the bigger concern is what comes next. at least in the u.s., we've not seen the impact taken just yet but in europe, it is greater. what we are seeing at alphabet right the worry is slowing growth. they are so mature that you have to really shine a light on cloud, waymo, youtube, really start disclosing these numbers to really show that the company has the next growth leg firing
up pretty soon. emily: something we will continue to follow and we will bring you any headlines as we get them as this conference call comes underway. thank you both. coming up, spotify also out with results. how the music streaming service reached 100 million paid subscribers and what that means for the global competition. this is bloomberg. ♪
emily: get ready to add wework to the list of highly anticipated ipo's for 2019. the shared office giant which reserves -- refers to itself as the we company says it filed in december for what will likely be the second largest filing of the year behind uber. wework is losing money. in 29 it lost $1.9 billion. . revenue came in closer to $1.8 billion. spotify the coming the first music service to hit 100 million
♪ emily: this is "bloomberg technology." uber's ipo has hit the home stretch. they plan to sell 180 million shares at $44-$50 apiece in what is expected to be the biggest ipo this year. executives and bankers will hit the road this week to promote the stock ahead of its pricing. pierre.us is at the high end of the range you are looking at a $184 billion
valuation. is that about right? >> yes, it is. absolutely. that's where the ipo range is getting us. go ahead. emily: why do you think -- it's certainly not as high as $120 billion, or at least as bankers were touting a few weeks ago. why do you think that price is right? challenge --e key today. uber needs to ipo it needs more funds to continue to grow more aggressively. a couple of things they will not be able to demonstrate in a straightforward way to investors today is its long-term growth potential and ability to get to profitability in the short-term. uber will have to continue to invest a lot in growth. that growth is went to be
difficult -- going to be difficult for investors in the near term. cane are three ways uber grow. the first is to add more users to the platform. that's what they are doing extremely well today. the second when they can grow is to get users to use their platform more and spend more on the platform, take more ri eats andrt using uber other services. it's difficult to read these drivers today. for uber to attract investors in an they need to be attractive range for investors to be ready to take the risk.
emily: so let's talk about just how big you think the main business, the ride-hailing business can grow. our bloomberg opinion columnist pointed out that the key business really is not growing that much anymore, and maybe that the market is not that big. make this argument about the transportation revolution, changing patterns of car ownership, and yet in some cities you see car ownership increasing overtime recently. how big do think this market really is? what if it is not as big as some people think it will be? >> is a fantastic question, it's a fantastic set up. there are two ways to respond. the first one would be to tell you listen, if you look at miles traveled by individual, heavy users of ridesharing today are
there are a lot of concerns. you can think uber is not growing much anymore in new york or even in the u.s. growth is slowing down, but at the same time there is a dramatic growth potential of us -- ahead of us. that's going to be the key controversy on the stock. as long as you have very fast growth in the number of users, it's difficult to see the growth in usage, in like the number of rides per user, because these new users you are adding to your user base are just starting using the service. they have a low usage, low monthly usage, and they are putting down the average number of rights per user. per user.ides int you need to believe order to buy into the ipo is
when the user base of uber is going to slow down, which will not be in the near term, it will be in a few years, then you will see usage growing overtime. these are things you cannot really see today. emily: all right. lots of open, unanswered questions. we will see how they answer those. always good to have you with us. thanks for stopping by. watch out, amazon. you are not the only company looking to launch one-day delivery. walmart has announced that it will to launch a 24-hour delivery service without any membership fee. some recoverhowed reasons amazon initially announced their competing delivery strategy. coming up, productivity startup front is betting big on the future email. can it compete big? have the company is looking to reinvent employee communications next. ♪
♪ emily: it is time for our work shifting series come up where we take a look out companies are leveraging technology to improve productivity and workflow. one startup tackling this challenges front. they help -- challenge is front. the startup aims to cut down on the number of emails that flood inboxes by allowing users to work off of an original thread, using internal chats and assignments. joining us to discuss is the ceo of -- ceo and cofounder front. how can you cut my a meltdown? my to -- might email --
email down? how does this work. >> if you are in a setting where you have teammates, we should be able to help you. the way we will help you is we are introducing collaboration workflows, automation, transparency, accountability in your inbox. emily: so in a way you are betting your future on the future of email. you have got a lot of backlash against email, people who want to get rid of it altogether. how do you combat that? >> i know. you hear a lot of come email is dead.- a lot of, email is email might decrease year over year on a personal use case. if you look at the number of emails shared in a work environment, they are
increasing. anytime youis communicate with people outside of your organization and even sometimes people inside your organization, you will still use email. i am betting on it. i am very confident it's not going away anytime soon. emily: let's talk about the competition and in some cases, big competition. google, microsoft, how do you take on companies like that? >> yes. microsoft google and is one thing, and then slack is something else. slack, in my opinion, is really about synchronous communication. if i need to ask you, do you want to have lunch with me, slack might be a good tool. talking withre people outside of your organization or if i am asking you the status on it object and i don't want to disrupt you,
email is better. we use slack at front. i think there is a use for the two of them. i feel like companies also need some time for deep work and strategic thinking. i think i all your communication isf happening on slack, that might not be the best way. google and microsoft are doing in milk products -- female products -- email products. they have millions of users, so they could launch a separate product, but i don't think it's going to happen anytime soon. if you look at how email has evolved over time, in the past 15 years no new innovation has happened. gmail introduced the writing and that's it -- the writing -- threading and that's it. emily: you just released a new
workplace efficiency report. tell us more about what you found in terms of trends in the workplace? -- the workplace. >> the main one was, people save an average six hours every week, which is meaningful. what the impact of saving time? people find more fulfillment and more meaning in their work. if you reduce the amount of time they spend on going through your inbox, emails, all of that, then they can really focus on what matters most, which is thinking strategically about their job and providing impact. i believe that when we think about the future of work, i think what's going to happen for sure is routine tasks are going to be automated. the flipside of that is than human beings will be able to focus on what's unique about
them being a human being, which is complex tasks, deep work, focused work, strategic thinking. emily: all right, front ceo and collin.r mathilde intel shares fell for a ninth straight session. last week the company cut its full-year revenue outlook. shares have dropped as much as 13% over the last five sessions in the longest streak of losses since september. coming up, 22 movies in and is the undisputed box office king. how the latest avengers a stallman -- installment is box office.he
and here is a segment about slowing growth at youtube. >> the rate of youtube click growth decelerated versus with a strong quarter one last year, reflecting changes we made in early 2018, which we believe our overall attitude to the user and advertiser experience -- additive to the user and advertiser experience. ♪
of this -- over half of this windfall coming from china. thank you so much for stopping by. give us some color on the imax view of this latest "avengers" opening. >> i don't know the exact numbers, but we have about 1500 theaters in 80 countries. this was a global phenomenon. we set records in 50 countries, which is just mind-boggling. we did 13% of the box office in the country in china on only 1% of the screens. this is a culmination of many years. we have been involved with a lot of the movies leading up to "avengers." there was a heritage, a connection. the movie was filmed with imax cameras. most fans wanted to see it the
way the russo brothers wanted it to be seen in imax. emily: what's the outlook for the rest of the showing? >> it's always hard to say. it's 1.2 billion for the movie overall. if you look at history, it would suggest at least two multiple going forward. in china there is something encouraging, which is this year the mayday holiday, which is usually one day, is 40's starting this wednesday -- four days starting this wednesday. and the rest of the world outside of the u.s., made a is a holiday -- mayday is a holiday as well. you look at the sellouts, all over the world, all the time. in the u.s. i think our capacity was 85% over the weekend for a
three-hour movie, which means more or less only the front rows and size or not there -- sides were not there. emily: no studio seems to have been able to replicate disney's success with these blockbusters. would you be concerned if disney decided to collapse windowing and put some of these movies on its streaming service sooner or first? >> i would not. imax is always about a cultural togetherness, social experience. this proves the theory about the theatrical experience. i think for these blockbuster movies, people want to go with their friends, they want to see it first, they want to be excited, they want to go to the water cooler or whatever that analogy is an talk about it. they don't want to watch it on their phone or a small screen. for the right kinds of movies, mid-level budget films, streaming it's perfectly fine.
and will succeed if any movie ever proved the value of that yet trickle experience, this is it -- but the ethical experience experience,rical this is it. emily: would you be open to working with netflix on an event film at some point? >> we would be. the big issue is the windowing. today it's three months. imax is housed within multiplexes with our partners being exhibitors. i think if they came to agreement with netflix on what the right amount of windowing was, we would. a few years ago we tried an experiment with netflix which was not very successful because of the windowing issue. my own feeling is that overtime i think the ethical windows will shorten to some extent -- the
rical windowseat will shorten to some extent. there will be a desire to get netflix, amazon, hulu, and apple movies. it has to do so in a way that both the exhibitors and streaming companies agreed. emily: it looks like india and japan are your next big growth markets apart from china. what do you think the opportunity is there? how much will streaming constrained that opportunity? >> i don't think the streaming is constraining the imax opportunity at all. our screens are six stories or eight stories high. i don't think we compete with streaming. i think it's completely different. japan, we just -- we started late there, but the traction we have got is incredible.
there is a 10 day holiday in japan beginning in the next couple of days. india also has a much more recent growth market for us. been much more constrained by how quickly we can do in buildout than anything to do with streaming. i think it's an apples and oranges kind of thing. ceo,: all right, imax good to have you with us. thank you. >> thank you, emily. said iteantime, apple pulled several parental control applications from its stores because of security and privacy concerns. the company also refuting a report that apple removed the programs in an attempt to eliminate competition with its own screen time tools. apple argues these apps give users control over user history, andowser other things to a third-party. what is your take on this story?
>> two things. i think apple makes a valid point. thee applications are using technology which is pretty intrusive for. consumer applications it makes sense to pull them off of the app store. my belief is apple has been slowly purging any type of application that uses that technology. which applications have had that technology for the past several years? what kind of impact 70 had our consumers -- impacts have they had on consumers? emily: apple released a rare statement saying they put users risk.y and security at it makes sense, but it's also convenient given that apple has made privacy a big issue, has focused on screen time. do you see that?
>> it is convenient and the timing is very interesting, but i happen to actually believe apple on this one. i'm not sure what the benefit to apple would be to remove completing -- competing applications. screen time is not something apple makes money off of. it's really a lose-lose situation for apple if they are pulling applications because it competes with screen time. i don't believe that's the case. emily: apple earnings coming up. what are you watching for? >> we are going to watch for iphone revenues. wereatest estimates i saw that year-over-year iphone sales could fall up to 20%. we are going to see another annual overall sales decline. i will be watching to see when that's going to start turning around. emily: we will be checking in with you for the numbers tomorrow. mark gurman from l.a.
♪ yousef: this is "bloomberg daybreak: middle east." disappointing readings on china's money factoring sector and earnings from samsung -- manufacturing sector and earnings from samsung. >> consumer spending rebounded in march. investors await tomorrow's fed rate decision and jay powell's news conference. yousef: a 4% increase in profits reported thanks to rising income from foreign-exchange and investment. >> just why is the billionaire investor opening a real estate brokerage office here amid such a prolonged property market