tv Bloomberg West Bloomberg August 16, 2016 11:00pm-12:01am EDT
mark: you're watching bloomberg west. let's begin with a check of your first word news. the fbi gave congress classified records from its investigation into hillary clinton's use of a private e-mail server. her campaign says it wants the documents shared publicly. abc news reports that beginning wednesday republican presidential nominee donald trump will attend national security briefings. in march, president obama signed a law requiring the white house to start preparing for a new president six months before the november election with at least three outside groups elected to help with the transition. the united nations says it is concerned about the safety of civilians, including thousands of children in the syrian city of aleppo.
violence has increased in recent weeks. syrian opposition monitoring groups set a wave of air on rebel held parts of aleppo , killed 15 civilians and wounded several others. more parishes have an attitude louisiana's federal disaster declaration after days of catastrophic flooding. 11 deaths have been confirmed. floodwaters are receiving in the southern part of the state with communities in low-lying areas still threatened by swelling rivers and backwaters. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton, this is bloomberg. "bloomerg west" is next.
emily: i'm emily chang and this is "bloomerg west." ford ceo mark fields tells us why he is focusing on a driverless car and doubling down in silicon valley. tim cook spending for survival in china. the apple chief vows to invest even more in one of its most challenging markets. google fires a shot at apple, and facebook in the mobile messaging wars. is it too late to catch up to some of the most popular apps in the world? ford pulls back the curtains on his ambitions and autonomous driving saying is developing a fully autonomous vehicle for ride hailing services in 2021. it would have no steering wheel. it is one of the last major automakers joining the push to automated driving.
now they are pairing up up with bidu, both investing $75 million into a start up making the technology that helps cars understand their environment. it is doubling down its headcount at the palo alto research facility. but ford has not struck a partnership with one of the big startups like uber or lyft or apple or google. i caught up with mark fields and began by asking what he considers partnering with a major tech player. mark: as we look at the technology and the roadmaps, there are things that others do better than we do. we are open to partnering. four new partners. emily: tesla is focused on a semi-autonomous model. there is a safety investigation going on into one of their crashes in which someone died. you are focused on fully autonomous.
your car does not even have a steering wheel. why is that the best way? mark: i can't speak for tesla. we are a leader in what we call level 0-2 driverless features. stopping you in traffic. we will continue to be a leader and continue to invest. at level 4 we have a lot of confidence and we believe in our plan that taking the driver out of the loop is important because this little no man's land of at what point did you have to reengage the driver in a level 3 vehicle. we are struggling with understanding how do you do that responsibly and timely for the driver. emily: someday, once you get your cars on the road, a ford self driving car will be in an accident. it will be rare but it will happen. when that happens who is liable? mark: we have to have a discussion with the regulators, the consumer advocate groups, insurance companies, etc. this is one of the areas where
we will have to work together to come up with good policies, both regulatory policies and legal policies. emily: one of the investments is with bidu. i spoke to the head of the self driving car unit there who says they want cars in the road by 2021 as well. will this investment help you get ford self driving cars on the road in china? mark: we co-lead the next series of investment for valedine. we were not partners with bidu, they are just one of the financial partners. i wouldn't read anything more into that. our china strategy is a good business in china. it is growing. as we think about mobility solutions there, we are thinking about how do we play a role in that in addition to our core business. emily: specifically on the fully versus semi-autonomous thing, do
you think, and i know you will not speak to tesla specifically, but do you think the semi autonomous model can be dangerous? is it unsafe? mark: we struggle with it. when you think about a level 3 vehicle, how do you reengage the driver in a timely way? that is -- we have struggled with that. that is why we have made the decision only to go to a certain level of semi-autonomous features, and they just say we will go for a fully autonomous. the tragedy in ohio or pennsylvania or florida, or wherever -- emily: he was not from florida but it was in florida. mark: those are some of our concerns. that is why we have taken the path we have taken. emily: when it comes to working with a platform like google or apple, do you struggle with the
idea of giving up that much control the someone else? mark: it's important going forward with who controls the relationship with the customer. it depends on how that is structured. emily: how do you see this playing out? this is a hotly competitive area of the market. we have talked about so many deals and partnerships. how do you see ford coming out? mark: i feel really good about our technical capabilities, but i feel good about how we are approaching this in talking with others and being realistic about what things we can do well and what things we can't and who do we need a partner with to realize our business. emily: do you need to invest in lyft or is gm getting ahead of themselves? mark: i can only speak to our strategy.
our focus is getting a fully autonomous vehicle on the road. we look at everything through the lens of what is going to create long-term shareholder value. whether it's our core business or emerging business. emily: have you drove one of the cars? mark: it is have you been driven? it is fun to drive the core vehicles and it is fun to be driven. it is really fantastic. you get used to it very quickly. you don't even notice after a while if you're having a conversation with somebody in the car. emily: ford motor's ceo mark fields. here with me to discuss more about cars and tech is alex webb. what you make of what he said? a lot of the reaction has been other companies striking big deals and this is still small potatoes. alex: on one hand you have the investment in technology which allows you to do the autonomous driving and the ridesharing.
the thing we have seen, the big competitors, they invested in technology in the form of cruise automation. reportedly as much as $1 billion . then they have also invested in ridesharing companies. they sunk $500 million into lyft. ford is focused on the technology to do in autonomous vehicle. clearly all these big ridesharing companies are burning to cash at a precipitous pace. perhaps maybe that the reason they don't want to get into it yet. ford will have to have a look around. emily: he said it's really important to figure out who holds the keys to the customers, who controls the relationship with the customer. i sensed a bit of hesitance and working with apple or google or any of these other players.
alex: one of the big parts announced saying they are going to provide some vehicles to google. the ceo was sensitive and said we are not just going to be bashing metal for google to get all the value creation. methinks the gentleman doth protest too much. there is fear all the valuation is an software which is highly profitable that comes from google or apple. and the low-margin building of cars is done by the classic oem. emily: but fiat chrysler is doing the deal. alex: the difference is fiat doesn't have the cash reserves and the ability to raise debt as readily as ford or general motors. it is hard to through a huge amount of money in research and development. ford is backing itself and we can have the cash to go into the
space if we want to. how many players are there of any significant scale in the ridesharing space? all of these guys now have big investments from carmakers. has ford missed the boat? it is a possibility. emily: a story out of china. apple making -- opening a big new r&d facility in china according to an e-mail statement from tim cook who is in beijing. he didn't specify the office's location or how many employees there would be, but cook says it will bring together engineers from some of its existing centers in the region. apple has more than doubled its number of corporate sites in china to 45. its spending has quadrupled. alex: a lot of emerging markets have a lot of quid pro quo stuff. you invest in our economy, you bring jobs here, you can bring factories here and research and development here, we will give
you greater access to the market. this is i don't think a colossal investment. it's a lot of consolidating of existing sites. it is another notch on the list of saying we are helping you,. emily: how many times has he been there in the last year? or india? alex: india is the next on the list, the real target. we will see how it goes when new iphone comes later this year. india is the next one on the target list. emily: tim cook is getting some stamps on his passport. alex, thank you so much. later we will continue our look at the transformation of the auto sector. we will hear from black lane, the latest german carmaker -- car booking start of to win when an investment from daimler. that is next.
emily: india has a new internet unicorn. hike messenger just raised more than $1.75 million from big tech backers. that pushes its valuation of the $1.4 billion. its users send 40 billion messages a month. the new funds will be put towards investment in ai, machine learning and augmented reality. facebook's whatsapp and tencent we chat dominate. google has struggled to come up with its own messaging hit. today we learned it will try again with a new video chat app called duo.
it's closest to apple's facetime . obviously google wins a lot of things. why are they trying to do this? >> they are missing out on the primary mode of communication which is messaging platforms. if you look at the number of people on this platform it is more than 1.6 billion and growing. google is lagging into the monetization potential of this massive audience because more and more services will eventually converge into these messaging platforms. facebook and snapchat and the younger audience might take the cake and google is missing out. emily: android and ios. if i had an iphone why would i use this? facetime is so easy. jitendra: that's a big question for every user. there are features that are a little different. you can see the calling as soon as you call, you can see the
other person and stuff like that. those things, if they catch on, apple can replicate. facebook messenger or snapchat can have that. it will be a big uphill battle. emily: facebook and some of these asian messaging companies have a huge head start. how optimistic are you that google will be able to catch up? jitendra: if you look at the history of google trying to close the social network gap, that did not go well. there was this dilemma. at some point it will come up again. even the ai-rich features, if that catches on, facebook will not be that far behind. they already have the audience in the engagement. between the two platforms you have one billion people in each one of them and growing. this will be an uphill battle and google will have to face the
dilemma of should we buy or build. emily: what is the monetization potential of video chat apps like this for google? how much money can they make? jitendra: it's just about the messaging platform. eventually they converge. now they have two different ones. probably the strategy is if one of them catches on, they can integrate the other and get the audience on board. facebook basically is in its early legs. they are trying to increase intraction with businesses. once the organic interaction increases, they will monetize. it is just the tip of the iceberg. emily: we will be watching to see of one or both catch on. thank you so much. univision is said to be buying gawker media for $135 million. this according to reuters.
univision was one of two bidders, with davis taking a formal offer for gawker. it was driven into bankruptcy in june after losing a high-profile lawsuit from hulk hogan, who we found it was backed by peter thiel. airbnb has a zero chance of reaching a high level chance of success there. this is bloomberg. ♪
an exclusive interview and asked what he thought of the recent uber deal. >> it was a win win for both of them. they could have taken more time to eliminate uber, but that would've taken too long. emily: how does it impact other u.s. startups and the sharing economy business, like airbnb which is trying hard to break into china and looking for a chinese ceo? >> i think looking for a chinese ceo is the smart move. that is something uber never did and it is a huge problem for any american company operating in china. airbnb is smart to look for a chinese ceo. its business is culturally different to be run in china. i think most of their efforts are trying to get chinese tourists to stay in airbnb abroad, which is ok.
but if they want to come in, and built an american like franchise, i think the user base, the habits of where people stay and the expectations on people who lease out space and people who try to rent space are very different. they will be in for a culture shock. if this market were so easy, wouldn't the copycat have become a $10 billion company already? emily: what do you think the odds are of airbnb succeeding in china where others have failed? >> if airbnb -- if you're asking how likely will they become an apple-level of success in china, i would say zero. emily: what about less than apple, like an airbnb level of success in the u.s.? >> that is also zero. if they want an uber type opportunity they probably have a shot. emily: obviously facebook is
still blocked in china, twitter is still blocked in china. what is the likelihood of those companies ever being unblocked in china? >> i think it is almost not relevant for those companies anymore because even if they were accessible, user habits are very well formed. users love using wechat and others. i think there is no chance users would migrate to their services even if they were available. emily: how about google? you know this better than almost anyone. google's own struggles in china. do you see google every coming -- ever coming back to the country? >> they will have to try a little harder than the other companies because of the way it chose to leave. google has a very diversified line of products. i think it has an opportunity to
pick the least sensitive products to try to land in china. maybe something that is hardware-related and doesn't have to do with social networks, and user data or censorship. emily: what about the search engine? >> search engine will be a little difficult. google pledged not to do censorship. that will make it difficult to enter for the time being. emily: let's talk about the reverse. wechat has had great success in china but difficulty entering the u.s. market. they have 700 million users. what is a likelihood they will be able to make the reverse happen and break into the united states? >> i think also pretty low. there are a few notable exceptions, but i would these view them as exceptions.
the best test for chinese companies that want to go abroad are to go to the countries that are similar to china. that is countries that are becoming wealthier, developing countries with large populations, highly dense cities, young people who want to try new things. countries like india, indonesia, brazil. even the middle east. if i were a chinese entrepreneur deciding to go abroad, those of are the countries i would focus on. not the united states. emily: we will have more that exclusive conversation next, including how he handles a pr crisis as former head of google china. check us out on the radio. you can listen on the bloomberg radio app, bloomberg.com and on serious xm. this is bloomberg. ♪
anchor: holding a tuesday advance. since concerns -- $55 billion leaving china in july, compared with $49 billion the previous month. anchor: global news, 24 hours a day. this is bloomberg. anchor: japan, coming back from its lunch break. david: a lot of that will depend on the weekend trades. this is what happened yesterday. 101, and then stop loss orders. as you can see, we are weakening. on the backs of comments coming from the finance minister. if we see more extreme moves
without the fighting what an they are going, to step in and intervene for a lack of better way to describe it. how does that translate into the ?quity market i a big drop when we were started. this is where we are at the moment. 16,087. no big break as far as dollar yen is concerned. draghi speaking. dollar finally halting a three day slide. you look across asian fx. seeing a it of pressure. have a look at cnh. he strong from the pboc. also seeing a lot of weakness today. bad export data out of singapore. let's leave you with a picture
of how things are looking. it drop overnight. really picking up. , a lot of data and news. overall on the way down. emily: this is "bloomerg west." he is one of the leading voices in china's tech community. former google president kai-fu lee. i asked him what his company is betting on. kai-fu: we are focused on several things. one is we are strong believers in artificial intelligence, in changing the future of china entrepreneurship. artificial intelligence applies to both traditional industries. making things like insurance,
banking, hospitals, schools become more efficient and helping users get more value. make more money from investments. get your disease treated more efficaciously. learning more in school. china has a massive amount of data that can be mined. we think that is a great way to use ai on big data. we also believe in ai applications in building computers that can see, hear and understand. a couple of industries we think are very exciting are the securities industry for commercial home, as well as government. we think robotics is very exciting, especially for certain vertical segments of the home such as watching young kids and older people. we also think robotics and commercial applications, like
the amazon tiva is very exciting for the manufacturing economy like china. these are probably our biggest investment themes in china. we look at enterprise services, which is now fledgling the starting to take off. we look at the creation of great content and recreation and entertainment. the next stage beyond mobile games in china. we think that is a big area as well. emily: we have touched on this. part of the reason it is difficult for u.s. companies to expand in china or for chinese companies to expand in the united states, are there cultural misunderstandings? is it regulatory issues? what are some of the most common things and regions and relationships within the u.s. and china at this level, the investing level, the entrepreneurial level fail? kai-fu: if you're a chinese entrepreneur that wants to promote his application and the u.s., you have never heard of
facebook before. how do you do facebook promotions? what do you use to distribute your app? 10 different app stores. there are various ways to get your apps to the top in those stores. but in google play, it is owned by one company that is very strict principles of how to operate. in china if you are doing a security application, you just go and sell to the provincial government. in the u.s. the opportunities are completely different. you have to not only be fully cumbersome with the american business, but drop all your practices in china. the reverse is the exact same. also on top of that, you are dealing with very aggressive peer competitive entrepreneurs. you are dealing with vc's that will quickly give you a lot of money but a lot of pressure. you are dealing with competitors
who may not follow the same professional standards and may create pr nightmares for you. you are dealing with very different set of government regulations. at google i had to defend the company. we were a month late with some tax payments and we became a headline about being tax evasion and being prosecuted. we had some trouble with search terms and those were blown up as a pro-japanese search. in the sino japanese war anniversary. these are ridiculous, outlandish, fabricated rumors created by perhaps our
competitors or people that did not like us. they were spread out everywhere in headlines. very difficult to even clarify ourselves. those are the types of issues that makes it extremely difficult. i would generally advise american entrepreneurs to find a partner in china if you want to go to china, and the same of the chinese partner to find an american partner. set up an arrangement where there is an alignment of interests. maybe let them invest in you and let the people who know their home country take the decision-making responsibility and drive your company forward in the country in which they understand. don't try this yourself. don't think you can hire someone to solve the problem. there are many casualties before you among the great companies like yahoo!, amazon, ebay, google. emily: xiaomi may be losing
ground in china. sales tumbled 36% in the world's biggest market. xiaomi shipped 10.5 million handsets, down from more than 17 million a year earlier. it is now in fourth place in china behind apple. they dispute the numbers saying other researchers found much higher shipment. coming up, uber china and the multibillion-dollar deal of the summer. they breezed past chinese regulators next. this is bloomberg. ♪
emily: more news from asia where didi and uber are moving ahead with a planned merger of their china businesses. major deals are often held up by antitrust regulators, a bloomberg reports this multibillion-dollar merger is likely to breeze past the anti-monopoly bureau. peter alstom joins us from tokyo with all the details. why wouldn't regulators try to hold of this deal? peter: it is a good question. the two companies will probably end up with more than 90% of the ride hailing market. there are a couple of factors in china that will probably lead to this deal being approved by regulators. a big part is this industry is so new at this point it is not clear who their competition is going to be. defending on how you define the market you can see lots of
competition. one of the things our sources tell us is it is easy to define this market more broadly as transportation in general, in which case there are other companies that provide transportation in addition to didi and the combined uber. not incidentally you have a chinese company buying one of the foreign companies that is been competing with them impressively. it is a good chance regulators will give this approval. emily: do you think the anti-monopoly board in china will take a look at this? aren't they required to come in when there are deals involving companies with more than $60 million in revenue? which you would assume didi makes. peter: depends on how they defined the revenue and how they report that revenue. regulators are going to look at this. it is too high profile of a deal. it involves high profile names in the country. they will look at it.
one of the regulators said they do need to make an application for approval. the ministry of commerce will look at it. the anti-monopoly bureau. china is a country where the government is used to regulating big companies. it is different from the united states when it with their freewheeling competition in the private sector. the government is more comfortable regulating businesses once they get a big share of the market. you can see a regulator approved the deal and watch pricing closely to see whether they are trying to gouge consumers. emily: talk about the role subsidies play in the market. peter: the two companies were quite vocal about the fact that one reason for this merger is they were subsidizing their businesses so much. they were offering subsidies both to riders and drivers. riders so they would try the services and take that instead of a cab or public transportation. and the drivers would come on board and give uber more drivers
or didi more drivers. also regulators have come out and said they don't want to have a market driven largely by subsidies. they see that as a distortion of the market. they could pull riders away from a while and capital from areas that are more sustainable from a profit standpoint. emily: peter from tokyo, that he so much for that update. turning to germany where black lane has just closed his largest funding round to date. it was led by daimler, maker of mercedes-benz. they recently merged their own ride hailing service. carolyn has more from berlin. carolyn: more flooding in for the mobility space. it is a limousine app called black lane. it is already scaled 200 cities. they just raised more than 10 million euros.
they led this round of investment by daimler, the owner of mercedes-benz. they have been speaking about the regulatory environment and how they are competitive to uber and coexist. the ceo spoke to us here in berlin. >> we are investing into the customers. we are building our technologies around the driver experience and also the customer experience. our drivers on average is extremely fragmented. two cars on average throughout the world. it's a very crowded space it needs to be consolidated so we are heavily relying on technology to do so. on the customer side with improved presentations, easier booking, and integrated following our customers were ever they go. on one hand digitally, whether you book you travel. are you searching on an airline
site, on an online travel agency site? where you typically book your flight and hotel is what they want to be present to fill the door to door circle. the one piece, and the other is the physical exteriors. we follow our customers wherever they go. we want to be there. we have launched in over 50 countries, 200 airports and continue to do so. carolyn: do you understand the u.s. company's frustration with regulations in europe? >> yes and no. there are regulations in place that have a good reason for being in place because they are good for the safety of customers and drivers. on the other hand they are competition limiting regulations. pretty old ones. they don't belong in our today's world anymore. carolyn: you are hoping the eu can find ways of making business
easier here in the eu? >> and also elsewhere. we are always looking for the customer perspective. and for a customer, choice matters. can make everything better. you have cheap mobility options. some for the short distance and some for the longer distance. as soon as you offer choice, actually the mobility services and the taxi industry, it starts to grow because customers at the end of the day come to a point where they don't need an old car anymore. they are standing around at the end time of its life. the budget is then free. also into taxis or right hailing or car sharing or the black lane service. carolyn: you seem to be fitting into the ecosystem where you can coexist with uber and some other taxi companies and car sharing.
what about china in terms of this is an interesting story that uber decided to hand over the reins, merge rather than compete. is that a region you are having to go into? >> it is the same story. the are not a local mobility service. it doesn't matter about what country we are talking. we serve international traveler needs. when you think of travel you can differentiate a country by incoming travelers, mainly international western travelers coming in the china. outbound china, chinese tourists going into the western world. at the end of the day you are talking about domestic travel. that is largely very local, short distance. that is not our piece. we bring people into china and out of china. therefore we can greatly coexist with all the mobility services around. carolyn: and you have been able to do that efficiently? >> we are currently working in the background secretly. don't tell anyone.
future success. they agreed to pay $8.6 billion for the controlling stake in the maker of clash of clans. they deal is still being finalized but we could hear more about what investors will -- when investors when feel the impact. advertising is the number two contributor to the top line. tencent warned about contract negotiations. and third, user numbers. they had a combined 1.4 billion monthly active users as of march. we will look to see if they can hold on or even grow those already staggering numbers. now a story we've been following closely. hampton creek's been in the spotlight for paying contractors to buy its own products from u.s. supermarkets. it made the mayo see more popular than it was. now the ceo is trying to boost employee morale.
olivia has a breaking the story scoop after scoop, no pun intended. you have more information. someone give you notes from an all hands meeting. olivia: they spoke to employees who are all shareholders in the company and he took questions from his staff. a lot of questions about the buyout program we reported on as well as concerns around fundraising. why the company has not reached its unicorn status just yet? emily: he maintained this was for quality control purposes? olivia: according to the transcript we have, he didn't go into those details. he spoke -- somebody asked about the creeker from program --
a little over 100 people were hired as contractors. he explained that to his employees because it may not have known about it. he also says there are people that cared about the company. he did not address the allegations that they were purchasing the product to boost sales, nor did he discuss the quality assurance aspect. emily: but he did talk about fundraising and financials. olivia: he said there are days away, anywhere from 48 hours to 21 days. he said this on friday. they would close a round that would value the company at $1.1 billion. this is something we reported on in may. somebody in the meeting asked why it was taking so long for them to seal the deal. he said it was just minutes away. emily: do we know if it's really minutes away? olivia: he didn't say who the investors would be but he described them. a large german media company. we reached out to every german media company and all declined to comment.
emily: do we know if your story has compromised any relationships with the supermarket chains themselves? olivia: we don't. i can't say so on the record. [laughter] emily: olivia, we will keep following your story. you are watching it very closely. great work. that does it for this edition of "bloomerg west." do not miss our conversation with the godfather of the internet -- he joins us to see whose job it is to oversee the world wide web. this is bloomberg. ♪