tv Best of Bloomberg Technology Bloomberg May 26, 2019 5:00pm-6:00pm EDT
♪ emily: i am emily chang and this is the "best of bloomberg technology," where we bring you all of our top interviews from the week in tech. coming up, trade showdown. the simmering trade dispute between the world's two largest economies is taking a toll on markets and the global supply chain. has a tech cold war already begun? plus, a fork in the road. tesla continues to get pummeled by the bears. one calling it code red. can the company weather the
storm? and amazon is working on a device that can recognize human emotions. is this the next breakthrough for voice recognition and ai? first to our top story. after months of predicting a trade deal between the two largest economies, economists and financial institutions are growing increasingly pessimistic. for one, the u.s. crackdown on huawei could make apple's troubled business in china even more difficult. the iphone maker could take a big hit if china decides to retaliate against the united states. goldman sachs estimates a chinese ban could cut earnings by 29%. loup ventures co-founder gene munster and bloomberg tech's mark gurman joined carolyn hyde to discuss. >> we think there is going to be an informal boycott of sorts. you know that china is not fond of america right now and the trump administration and these tariffs because of how it will impact the economy. when these types of things happen, you see them sort of latch on to their own brands.
huawei, in many respects, is the apple of china. it has been called that by many people. they love huawei there. if people are going to choose in china between an iphone or huawei device, they might lead towards huawei because of the tariffs and the trade situation and specifically what is going on with huawei right now, this impending u.s. ban. >> gene, as someone running these numbers, we have heard tim cook blame the slowdown, to a certain extent, laying it at the feet of trade tensions between the u.s. and china. how real of a threat do you come in termsuld be of the bottom line for now? >> i would agree 100% with what mark is saying about this boycott apple campaign that will definitely start in china. but i want to put to rest some people's fears around trade tariffs, from the chinese putting that on apple products. like what goldman was talking about. i think that is unlikely. we have recently spoken with
people, former u.s. trade officials, and what is most important is even the people who understand the intimate workings do not know how this will play out. but one thing that has been reiterated to me is that apple has been an important partner for china. in total, about 3 million people's jobs are impacted by apple in mainland china. so i think that even though it captures a good headline about a tariff, i think it is unlikely that that, in fact, will happen. >> interesting perspective. mark, from what you are seeing, in terms of apple trying to preempt -- we know that huawei has already preempted this. they apparently have three months of supply they managed to preorder and make sure they have been stockpiling. has apple been looking at changing in some way there's a -- their supply chain? it is such a juggernaut in china, it is so important. >> if apple is going to shake up
its supply chain, it would take a matter of years. 5-10 years for a full transition. apple's manufacturing in china is not as simple as popping iphones out of china through foxconn and then shipping them out elsewhere in the world, all the way to the united states and elsewhere. it is this vast network of suppliers, not only in china, but in taiwan, korea, other parts of asia. some stuff comes from the u.s., some from europe, pretty much all over the world that is then sourced and funneled into china for final assembly. so it is so much more than just one factory or one, as they call it, a city in china to build these things. it is a vast array and all of those moving pieces pretty much make it impossible for any significant changes in the near term to occur. >> there is potentially some silver lining, just maybe, and it is the element that google's android operating system is going to be hit to a certain extent by no longer being able to do business with huawei. is there a way in which international demand outside of china could pick up for apple's
smartphones if the operating systems of higher end huaweis is hit? >> for sure. apple is not as strong as some of the other makers outside of the united states. in the u.s., apple is obviously the strongest provider, but in china, we see a proliferation of chinese brands. and in europe, huawei has a strong stronghold there. they are 20%, 25% of the market, according to the latest statistics. so if android goes away, it will uaweithose while way -- h devices less appealing for consumers. if you are in europe, you might not be going for chinese brands, you are going to look at something like an iphone. so i think from that perspective, apple has a lot of positivity there. i just don't think it is going to move the needle. emily: bloomberg's mark gurman and gene munster there with loup ventures. and earlier this week, bloomberg's taylor riggs spoke with myron brilliant, the head of international affairs at the u.s. chamber of commerce, about the ongoing trade war between
the u.s. and china and what he is hearing from u.s. businesses. >> look, a lot of u.s. companies sell into huawei. certainly it is an important company. it operates in over 100 countries and has over 180,000 employees. at the same time, it raises legitimate concerns about security issues. and we need to keep issues with respect to huawei separate from the commercial trade talks between china and the united states. so what i am saying to you is that at the end of the day, we are very concerned about the overall environment between china and the united states. huawei factors into that, but we shouldn't be surprised that our government is taking a close look at huawei's operations and how it impacts our security concerns. >> i like that you said to separate the national security concerns relative to everything else. so let's go to everything else. at the top of the introduction, we were talking about companies like adidas and nike, who have started to come out and say we are concerned about the effect this is having on consumers.
what other industries or companies are you talking to that are also highlighting these concerns? >> those are good members of the u.s. chamber, but we do $2 billion of trade between china and the united states a day. we have a huge economic relationship, you're talking about the two largest economic players in the global economy. so of course, what happens between china and the united states matters, and we are concerned about tariffs because they are a tax on consumers. they are a tax on manufacturers. and of course, the escalation of trade tensions could hurt our economy. it is certainly going to hurt china's economy. but let's take a step back and recognize why we are here. we are here because china conducts unfair trade practices. it does not protect intellectual property rights. it forces technology transfers. it does not allow for a level playing field when it comes to market access. and there are a host of other legitimate issues the administration is trying to tackle.
and i think we have to remember that at the end of the day, we need a trade agreement that is a high standard, comprehensive one. we do not favor tariffs as a tactic, but we do favor trying to address these issues in the bilateral relationship. and it is something we are going to continue to push, with both the united states and the chinese government. >> myron, what is the right tactic then? you have said you do not necessarily support trade tariffs, but you are aligned with the trump administration on trying to tackle some of the issues that you highlighted, like intellectual property theft and unfair trade tactics. what is the right approach? >> i think there are a multitude of things that should be done and are being done. we need to bring our allies into the picture. of course, europe and japan share our concerns, so they need to be a part of the strategy. we also need to look at the ways we can address these issues in a confrontational way, but in a way that is pragmatic. at the end of the day, we need a
trade agreement with china and the united states because both countries need it. we need to put this relationship on a more stable footing, on a more positive trajectory. we are not there. there is a huge amount of distrust in the relationship. that is not good for the united states or china or for the world economy. and at the same time, the underlying tensions here have to do with having a competitive environment where there is a level playing field. so i think we need to think about how to do that best in the context of these talks. i am hopeful talks will get back on track. i don't think that will happen until president xi and president trump meet in osaka, japan. that will be at the end of june, during the g20 meeting. it is very important we bring the temperatures down and the two sides resume talks as soon as possible. >> you talk about bringing the temperature down, i want to ask, how tense does it feel? what is the sweat level in the room relative to previous discussions that we have had really in the last couple months, the last few decades?
>> i have met with top administration officials and vice premier liu he. i will tell you we all thought a deal was likely on may 10. they were 90% of the way there. the last 10% is the hardest part. what do you do with the tariffs that were in place? now we have seen an escalation of that with the tariff hike on the existing $250 billion. but we also have to recognize that china has to come to the table in a meaningful, concrete way. backsliding or whatever china did with respect to the issues, there was a 150 page text, seven chapters -- these agreements have to be enforceable, have to be verifiable. so i think it was right to the administration was pressing for reform under chinese law and not just a state directive. so i hope we can get back to the table in the weeks ahead. i hope that the two presidents during the g20 meeting will set the right tone for constructive talks, but we are at an impasse
right now. and both china and the united states are going to find it very difficult, they have boxed themselves in with escalation of tensions. but at the end of the day, this is too big of a relationship to fail. there is not going to be any decoupling and we need to see these two governments get back to the table. it is in the interest of the countries, the economy, and the global economy. emily: myron brilliant with the u.s. chamber of commerce. coming up, qualcomm slides dramatically after an unfavorable antitrust ruling. what the decision means for the chipmaker's settlement with apple, next. and if you like bloomberg news, check us out on the radio, the bloomberg app, on bloomberg.com, and in the u.s. on sirius xm. this is bloomberg. ♪
squeeze excessive licensing fees from phone makers and strangling competition. the chipmaker says it disagrees with the ruling and will seek an immediate appeal. analystswith about the ruling. >> this is not just a nice little sideline for this company. we are talking billions of dollars of high-margin revenue that come in every year. that money is used to fund an industry-leading rmd asset. that gives qualcomm the best chips in the industry. if you want to buy a 5g phone right now or the rest of this year, you will be buying a qualcomm chip, and that puts the company in a very strong position. the threat to that is clearly serious, and that is what the market is reflecting today. >> let's get a market perspective. stacy rasgon is joining us on the phone as well. stacy, your perspective on the severity of the selloff. is it in line with the severity of risk to the business model? >> in theory, yes. although i am a little surprised at the magnitude, because i
would have thought if you were paying attention to the trial itself in january, the idea that they were likely to lose was probably not going to be a surprise. that seemed clear from the tone that emerged from the trial. i would say that maybe in the wake of the apple settlement, investors were hoping the judge might go easy on them. that does not seem to be the case. and as i heard ian say, it goes to the heart of the business model. now the risk is that -- we will see what happens with the appeal, but the risk is that the fundamental drivers of the business model are at risk, given the remedies the judge has mandated here. >> yeah, as one of our colleagues wrote, "it may reduce royalty payments, rewrite every customer contract, give shares of ip to rival chip companies." it has already rewritten its customer contract with apple. will that remain in place or
will that be some sort of standard bearer what contracts look like going forward with other companies? >> there are two things here. first, there were no provisions that automatically triggered a recasting of the contract. that was some news we broke earlier today, so we are sure about that. but back to what stacy was saying, the judge said that apple have to go back out -- that qualcomm have to go back out there and renegotiate any of its existing agreements which are based upon this bad behavior. so we really don't know yet. >> it comes at a very interesting time, stacy. given the pivotal role qualcomm plays within 5g, the race that we have seen between china and the united states, the blacklisting of huawei, it all seems to be a pretty opportune moment for potentially trump himself to weigh in and in some way try and support what he hopes is going to be a beacon of growth for 5g in the u.s.
do you in anyway anticipate government interference in this? >> it is possible. we have already seen some interference in this case. the doj filed a statement of interest a couple of weeks ago, essentially asking the judge that, if she found against qualcomm, they were asking for another separate hearing to discuss remedies. and the judge basically dismissed that in her ruling. the judiciary is independent and she can do what she wants. now when qualcomm goes ahead and appeals to the ninth circuit, maybe there is another opportunity there for some of the other governmental agencies to weigh in, trump to weigh in. maybe they will potentially find a softer go in the appeals case. emily: bloomberg's ian king and bernstein senior analyst stacy rasgon. coming up, mixed messages. the department of justice is leaning against approving the $26 billion merger between sprint and t-mobile, while the
emily: bloomberg was first to report the u.s. department of justice is leaning against approving t-mobile's takeover of sprint, because the concessions proposed do not go far enough to mitigate antitrust concerns. t-mobile and sprint are planning on announcing commitments, including asset sales and a restriction on price increases to help secure regulatory approval. meantime, fcc chair ajit pai recommends the deal be approved. for reaction, we spoke with bloomberg's david mclaughlin, who broke the story, and the founder of boost mobile. >> well, approval from both agencies is needed here, as well as from state attorneys general who are investigating this merger. it is very common in telecom deals to have both the justice department and fcc review a deal. and they both have different standards when considering approval.
the doj is focused on competition, will a merger lead to higher prices for consumers? the fcc has a much broader, standard, the public interest standard. typically, they come out on the same side of the deal. they work very close together. and here, it looks like the doj is leaning against the deal while the fcc chairman today announced he intends to recommend approval. emily: interesting. peter, obviously this has been a long time coming. there have been many twists and turns. both companies have suggested concessions that they can make, but it sounds like the doj thinks there is not enough. what is your perspective on whether this is good or bad? >> it is interesting, because i actually spent a lot of time meeting with the doj and with chairman, chairman pai and commissioners.
the doj is concerned about the competitive nature of this merger and i was pushing for the divestiture of boost. i was quite surprised to read that article today because i thought that the divestments they offered, divesting boost out, was something the doj would have saw as a positive. i am not concerned as to whether sprint, the new t-mobile will go after verizon or at&t. i think every one of them wants a high paying customer side. i was always concerned about the prepaid, and i made that point. i think the commissioners have made the right decision because it really does protect the low income customers, which are the ones we need to be concerned about. the high end customers, you know that the new t-mobile will be fighting tooth and nail with verizon and at&t to get those customers. it is the prepaid part, which verizon does not play in. i think they have less than 5 million subscribers. at&t has only started to warm up to it. and no doubt, t-mobile and
sprint have the lion's share of those prepaid customers. i was very surprised, because i thought the doj would have liked that. another part of was surprising was the divestiture of boost. -- of spectrum. i think that would have allowed a lot better conditions in this merger to go through. so i am surprised that was not mentioned, but having said that, they made the right decision on the divestiture of boost. emily: and the promises they have made, as i understand it, david, the sale of sprint's boost, the prepaid brand, advancing 5g, and they pledge to not raise prices while that network is being built. where do those promises stand, including boost? >> >> well, those -- except for the divestiture of boost, those of the promises, behavioral conditions that this justice department has made clear it does not like. and that was an issue that came up when at&t tried to buy time warner last year and the justice
department sued to block the deal. you know, it is possible here that the companies could make additional divestitures to satisfy the doj. it is not unusual for the department of justice to look for a different remedy than another regulator. we saw there is sometimes a split with the eu and doj. that is possible here, so you could see another one of the prepaid brands being sold, or possibly spectrum. we haven't reported on that, but that is always a possibility as a way to get the justice department on board. emily: so, peter, if this deal does not happen, what does that mean for your business and vice versa? if this squeaks through? >> i think the question has got to be asked, the statement they made today about the divestiture of boost was like a 30,000 foot level statement. there is a lot of devil in the details. there is no point just spinning out boost and giving it a wholesale deal that doesn't allow it. the question is, who is allowed
to buy it? is at&t and verizon allowed to buy it? tracfone, a competitor to boost today, able to buy it? there are some questions that need to be asked. and who is going to police those? who is going to make sure you get the best deal you possibly can get to compete against the metro brand? there are a lot of details that have not seemed to be brought out. and then who will police that? who will oversee to make sure the deal that the new owner of boost gets gets the right ability to compete? i'm still waiting to hear the details of what that is going to be. will that just be left to t-mobile to sort out? will the fcc play a role in that? if the doj comes on board, will they play a role? there are certain people who should buy it and certain people who shouldn't. so i am interested to see the details, because at this stage, they are very light. emily: meantime, david, the fcc would still need to vote on the
the deal, even though the chair said he would endorse it. we spoke to fcc commissioner brendan carr earlier on bloomberg television. take a listen to what he had to say. >> part of our years long review at the fcc has been looking at the competition issues. if you look right now, a combined sprint and t-mobile would would have the same size and scale as verizon and at&t in terms of customers for the first time. when you have a third competitor on that scale, what our records showed is that there is going to be really big benefits for consumers in terms of the new composition you are going to see. emily: so, david, sounds like he is in favor. any indication about how the rest of the fcc feels, despite the potential pushback from the doj? >> no, i think you would expect that the fcc is controlled by ajit pai. there are three republicans.
you would expect that if he is backing a deal that it will win approval, even if the two democrats on the commission vote against it. the difference at the justice department is that it it is one man's division, the head of the antitrust division. it is his and his only decision and there is no committee, so he has been -- he was aggressive on at&t and time warner. he really surprised a lot of deal-watchers when he sued to block that deal because those companies were not direct competitors. and here on its face, this deal, putting aside the promises of 5g, would be anti-competitive. because it is combining two of the four national carriers. this is the deal the doj opposed when it was proposed back in 2014. emily: david mclaughlin for bloomberg and peter atherton of
♪ emily: welcome back to "the best of bloomberg technology." i'm emily chang. amazon is once again pushing the boundaries of what technology is capable of. the company is working on a voice-activated wearable device that can recognize human emotions. bloomberg has seen internal documents and drawings that described the gadget as a health and wellness product worn on the wrist. it also has microphones and software that can determine the user's emotional state from the sound of their voice. we have the story with bloomberg's matt day. >> amazon thinks that with all of the data on voice that they have amassed so far, that they can tag that with indicators about how somebody is feeling.
if they seem aggressive, docile, what the pitch is like, and somehow, after putting all that through their software algorithms, they can burp out exactly what emotion the wearer is feeling and use them to offer them product, advice, the sky is the limit from there. emily: so my next question is how well is this working. do we know how much progress they are actually making on this kind of technological breakthrough? matt: you know, we don't. they have been at it for quite some time. if the patents we filed in the story are to be believed, one in 2017, last year recently, a trial to make sure that the software can accurately tag peoples emotions. there are concerns that may be a system like this would not be accurate when they fully roll it out. but it is all to be seen. we don't know how far along this is or whether it will become a commercial product that will be released. emily: meantime, amazon has been working very hard to get alexa
on the move beyond something plugged in to my kitchen counter, something that whether , it is headphones or in cars or other kinds of wearables, how much progress are they actually making? >> it is unclear. you know, they certainly don't have the install base of google's android or apple's iphone. we think about a smartphone coming ready-made with a voice assistant. amazon seems to be throwing everything at the walls to put alexa in other places. you mentioned the car device in earbuds that are supposed to be coming, featuring alexa. we remember the microwave last year. they really want to make alexa anywhere. so far, that strategy does not include a smartphone after their flop with the fire. sort of absent that, they seem to be trying every other door. emily: and with all of the concerns about privacy and our data and how tech companies are handling that data, how would amazon handle emotional data? categorize it, store it?
>> that is a great question. and you know given that this , might be far off from commercial availability, they -- the spokespeople or not exactly interested in speculating on what that look like other than saying "we take privacy seriously." but you know, as our reporting on the folks who listen to and audit voice recordings that are sent to alexa shows people should be aware that this is another source of data that tech companies are going to hold onto. if it actually does come to market and sort of do more r&d with it. once you have given up this technology to a tech giant, it is sort of theirs to do with it what they will under their privacy policies and use policy. emily: i know there are a lot of unknowns. quickly, how soon might an alexa wearable hit the market? matt: that's a great question. i wish i knew the answer. they have in recent years been announcing new alexa devices and the new echo products toward the end of the year in september. i would not be surprised if there is another devices event we look forward to towards the
end of this summer. foughtfacebook has just its biggest battle yet with bad actors on the platform. the social media giant says they removed a record 2.2 billion fake accounts in the last quarter. that is after facebook saw a "steep increase in the creation of fake accounts." mpany said it removed the majority of the counts within minutes of being crated. still, the company says 5% of monthly active users are fake. in a press call, ceo mark zuckerberg said a shift to privacy made policing such content even harder. >> we recognize that it is going to be harder to find all the different types of harmful content. we will be fighting that battle without one of the very important tools, which is being able to look at the content itself. it is not clear on a lot of these fronts if we will be able to do as good of a job identifying harmful content as we can today with that tool. emily: joining us to discuss
facebook is the vice president of global policy management, monika bickert. monica first of all, what is driving this steep increase in fake accounts? where are they coming from? monika: emily, some of it is coming from new tools that people are using to try to create large amounts of fake accounts in an automated way. and understanding that, our engineers have really invested in building systems that can catch it. we have gotten better, and over the last quarter we have seen those efforts pay off. emily: are they from any particular country or any particular groups? monika: i don't have any other information to share on that. i would just say that we see fake accounts created all over the world. when we build our systems, we are focused on tackling that at a global level. emily: we just heard what zuckerberg had to say about encryption on a call. will this shift toward encryption, towards privacy, will that erased some of the progress you are making? monika: mark pointed to some of
the challenges we will see, and i spent my career before i came to facebook -- for over a decade i was a federal criminal prosecutor. i have seen the importance of law enforcement being able to access content using search warrants and other things in a very valid way and a very important way. so we are mindful of that. that is one of the reasons that as we look to find what is the best privacy model for our community, we are also focused on what do we need to do to keep that community safe. emily: meantime to that point, you have announced a new oversight board for all facebook content decisions. what will that look like and when will it happen? monika: the oversight board is a new initiative we are trying to launch by the end of this year. and basically what this will be is a group of people acting independently from facebook, people with relevant expertise who can look at specific decisions we have made around specific pieces of content. so if somebody has posted
something we removed it. , they asked us to take another look at it. we say we will keep it off our site. they can go to this external board and ask the board to take a look at it. and whatever the decision the board makes will be binding on us. if they say, put the content back up, we will do that. emily: so we have just seen elections in india, very challenging. you had to moderate content in like 10 different languages. what are some of the learnings there that you will take forward? monika: we are really focused on making sure that we are doing our part to keep elections free and fair. and as part of that, we built a team that is talking to election commissions around the world and looking to understand what are the unique challenges that elections might face in different areas. emily: so what are some of those challenges? i mean speaking of india in , particular, what did you learn in this most recent situation that could help you in other countries? monika: well, in all of the elections, we are learning different things. and we have actually put out
some posts in our newsroom where we have addressed the different actions we have taken in regard to specific elections, including in india. one learning we have had i would say across the board is that people will try to use fake accounts in a number of different ways, including to spread spam and including to share misinformation. and while much of that is not relevant to elections, it certainly could be. when we think about how to keep elections free and fair, one of the things we are investing in his making sure we are removing fake accounts as quickly as we can. we remove more than a million accounts a day at the time of upload. emily: so we have got a must-watch u.s. presidential election coming up in less than 18 months at this point. how well-prepared do you think facebook will be by that point to avoid what happened two years ago? monika: we are preparing now. we are working very hard to make sure that we have all of the measures in place to make sure we are doing our part. emily: so on the call, various executives spoke about the
challenges of moderating content in different countries and how you are expecting various governments to put certain laws into place about how content is moderated in their particular country, which will likely differ from country to country. how will you deal with different rules in different countries when there are 200 different countries? monika: it is a real challenge. and this is not a new challenge for us. our policies are global, meaning that the rules we have for bullying and harassment or hate speech are the same in france as they are in south africa. so we are used to dealing with very different norms around speech. when we look at different laws in different countries, the issue gets more and more complicated. it is one of the reasons we think it is important to have the conversations with regulators early and help make sure that the regulation we do think should be in place is also very thoughtful and informed legislation. emily: coming up, it was another rough week for tesla with the bears piling on. we will discuss.
emily: shares of tesla continue to come under pressure this week, trading at its lowest level since december of 2016. citigroup lowered its price target to $191, highlighting negatively skewed risks and lingering demand, as well as cash flow concerns. gene munster and craig trudell waited in with our own caroline hyde. >> there are still some folks on the street who are too high with this stock, and that is problematic, just given what the citigroup analyst said this morning, that sentiment is a real problem right now. the big concern that he flagged, and that morgan stanley flagged, that evercore has flagged, all of these analysts who have stepped up to raise concerns about this name, is demand. there was a company that was having real production problems
last year. this year, though, the big story is deliveries and not being able to sell as many model 3's as you note maybe elon musk sort of suggested there was demand out there for. and the model s and model x are a little bit long in the tooth and very expensive. and that is causing real problems for deliveries and is -- what has everybody freaking out about this company right now. caroline: jean, yeah. morgan stanley's weighing in a way, they are too early to the party. we have not seen demands catch up. they are saturating the market. do you agree with that? is demand going to eventually play towards tesla's strength? jean: eventually it will. i am a believer in tesla. they will turn the corner and capture what will be a juicy growth curve around electrification of vehicles. we are at 1% to 2% today globally. eventually that is going to be 100%. 2019 will be a difficult year. they are going to miss their numbers, their target.
everyone knows that. but i want to really focus in on what has happened in the last three weeks around the story. the stock is down 27%. it is down 24% since may 5 when trump tweeted twice about 25% tariffs. so there has been an acceleration on a downturn in this stock based on what has happened in the past few weeks. you mentioned analysts have largely not changed their opinion. the reason why the stock has dropped is ultimately, this gets back to the demand, the china piece is now more in question. and i think that there is is risk. this is different than apple. i think there is risk that teslas are tariffed going into china. and separately, i think there could be some consumer backlash against the china brand. but china is probably about was , expected to be about a quarter of the sales for this year. if that number gets down to 12%, then there is going to be a little bit more of a dramatic miss. i think it is investors getting comfortable with the china risk that has really thrown the stock
into a tailspin more recently. caroline: has it fallen far enough, gene? i'm looking at a new story being posted by dana hull with analyst adam jonas once again from morgan stanley being quoted as saying overall tesla is no longer seen as a growth story. it is seen more as a distressed credit and restructuring story. gene: in the near term i don't , know. in the next three weeks to six months, i don't know. i think it is going to be a difficult year. i think the stock could trade lower during that time. i think that this is not a distressed stock story. i think that this company, there is just so much emotion around people who are following this. i think, stepping back from the emotion, there is the electrification, there is an autonomy peace, and those are very important. i think ultimately, with all of its flaws, this is not a distressed company. they have this recent raise of cash, this $2.7 billion. that will get them an extra two
years of runway at about $300,000 annual run rate, which is essentially the revised estimate now. so this is not -- distressed means you are at risk of going out of business in the next year, and this is not at risk of going out of business. caroline: we are looking at tesla's free cash flow there. craig, your perspective on the autonomous part of the equation. we had -- i was speaking to a needham analyst yesterday who was talking about how some of the safety records in autonomy unfathomable that we are going to get those robo taxis in the next year. what is the autonomous equation from your perspective? craig: right. i think you heard gene talk about the concern of china. another one that i will maybe throw out there that has also come into play and helped fuel the selling has been this issue of another fatal crash in a tesla involving autopilot, where the ntsb came out with a preliminary report last week. it was very similar to an incident a couple of years ago in a model s, where a semi truck
was crossing the road and the tesla did not pick up on it and a person was killed. and so you know elon musk has , tried to sort of take people's attention away from demand and the delivery issues the company has been having and talk about the future of robo taxis. and he has really sort of undercut, in terms of being able to make the case that we are on the verge of this robo taxi future, when it is a case of deja vu all over again of someone tragically dying in an incident involving autopilot. stephen: very quickly -- caroline: very quickly does elon , have to be more transparent? gene: no, i think he just needs to be more judicious about what he says and set better expectations at the core. and unlikely we will get that anytime soon. so whatever he says, dial it back by 40% and that is probably the right answer. ♪
emily: retail startup verishop wants to "bring back the joy of online shopping," while also taking aim at amazon. but is it possible to shake up a marketplace that is already so crowded and dominated by one major platform? i caught up with the cofounder and ceo. before launching the company, he was the chief strategy officer at snap and a longtime investment banker at credit suisse. imran: e-commerce is 9% of the overall retail market. i believe that over the next decade, 30% to 40% of all retail
will be online. and if you look at there are not , that many consumer choices when you look for buying branded products or having a better experience, a better way to discover products. so we think there is a lot of opportunity to innovate. if you look at markets like china, for example, where 25% of the market is e-commerce, there are many more players in china compared to in the u.s. so i think that is a better way to bring joy to the consumer mind when they are trying to buy things. emily: you obviously focus on a younger audience at snap. is there something you learned there in terms of the needs that wasn't being met in e-commerce? imran: absolutely. i think if you look at millennials, they like to do more research before they buy something. they also care about responsibility in terms of shopping. they care about economy. they care about sustainability. i think you as a consumer, for example, it you want to buy a sustainable product, where do you really go? so we have a lot of different
ways to discover products. if you look at our platform, we have 200 different attributes. so i think i am really excited to bring a new way of shopping to consumers. and the market is really large, and i think it can accommodate a lot of players. emily: what makes you think you can take on amazon, which already has scale and convenience? they are going from two to one-day shipping. imran: yeah, so first of all, i really admire amazon. i am a shareholder of amazon personally, and through my fund. however, i think as e-commerce goes from 10% to 40%, one company cannot solve everything. and amazon is also a juggernaut. they do software, they do a lot of different things. really admire the company, but there are a lot of parts of e-commerce that have not been addressed by existing players. i think we can bring that. that sense of discovery, you know? we can give consumers different ways to discover new products. emily: your wife and also your
cofounder also worked at amazon for many years. so what sort of secrets does she bring to the table? imran: no secrets. [laughter] i think, you know, amazon is a very large company. she worked at one of their subsidiaries, and she learned a lot from there. i think it is great to work with her. emily: so obviously you helped take snap public. before that you took many companies public, including alibaba, which is another e-commerce company. i have to ask for your thoughts on what is happening in the public market right now. we were just talking about what went wrong with uber, and i'm sure you are watching from afar. what is your take on what happened there? imran: happened? at uber? emily: yes. imran: i don't want to specifically talk about uber, but i think if you look at the recent -- one thing that stood out to me is the companies that have more ability to make money or have more probability of making money versus the companies who will have to raise the company again in the future. or potentially have to raise the money in the near future. i think it makes sense.
we are in an economic cycle. you don't probably want to write unlimited checks to companies. so i think if you look at some of the companies that are profitable, like zoom did really well. companies that are actually not making money and have no near-term profitability did not do very well. i think the market is telling these companies that look, you have been around for a long time. at some point, you have to make money. emily: so do you think then there is a sort of reckoning coming for tech companies in particular, which have historically gone to market without being profitable? amazon is one of them. imran: yeah, but look. amazon has almost funded their business through their own cash flow. amazon did not have to go raise money from third-party capital. i do not even remember the last time when is amazon went and raised capital. and even if they raised, it was more of a point of strength than a point of weakness. so i think the big thing is -- i think we lived through 10 years of bull market, and i think a lot of these companies are involved in many different initiatives.
at some point, they have to prioritize, and what is going to drive more profitability. you need to show what your path to profitability is. emily: you spend a lot of time sourcing tech deals in china. how much do you think what is happening in the public markets is because of the fundamentals of these companies and because of what is going on between the united states and china? imran: >> in terms of china, i think trade war is not good for anyone, you know, but i think at some point, all trade relationships have to be based on mutual respect, which helps. and i think everybody agrees that over the last decade, some of the relationships were a disadvantageous situation. so i think current economic development, given the u.s. trend, it makes sense that the u.s. will engage in a trade negotiation. and i think it is a bipartisan viewpoint, this point, that we need more respectful, mutual relationships with china and our trade partners. emily: how optimistic are you that the relationship will get better, or do you think it is only going to get --
imran: i think it is in the interest of both parties to come into a relationship. so i think when it is in the interest of both parties, there will be a relationship. but like any situation, it is a tough position. there are a lot of things to work through. maybe i am not very close to that situation, but i am optimistic there will be a good outcome. obviously it will take some time, and i think it is in the interest of both parties. emily: ok so let's talk about , verishop. when are you going to launch? imran: late june or july. emily: what will we see? imran: i think you will see our commitment in four areas. number one is trust. most of the e-commerce players are in a marketplace. when you're in a marketplace where anybody can list or post something, the platform is prone to counterfeit and fraud. we saw that with ebay. we saw that with facebook. we saw that in china. so i think what we are doing is -- directly from the brand. we are guaranteeing everything we are buying is real.
i think trust will become an important part of the internet. because over the last 25 years, the internet was built on the premise that open platform. we saw that when everything is open and there are no rules, that it brings chaos. so i think we are building all the products you are finding, it is real. we are standing by that because we sourced directly from the brand. second thing is discover. discovering new products. because again internet is very , much intent-based, so we are giving consumers choices to discover products in a lot of different ways you will see. and then the third is we are going to continue to make a big commitment on convenience. i know amazon and other companies does it, but we will continue to do so. two day free shipping, free return, all of those things. so i think, you know we are , excited. it is just the beginning. it takes a long time to build a business. hopefully we will continue to bring new product and new innovation to the platform. emily: imran kahn, the cofounder and ceo of verishop. that does it for this edition of "the best of bloomberg technology." we will bring you the latest in tech throughout the week.
paul: welcome to daybreak australia. i am paul allen. shery: i am shery ahn. sophie: i am sophie kamaruddin. we are counting down to asia's major market open. paul: here are the top stories we are covering. always found are facing the sanctions -- we speak exclusively to him. >> i will ignore trump, then with whom can he nego