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tv   Best of Bloomberg Technology  Bloomberg  December 31, 2016 11:00am-12:01pm EST

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♪ caroline: i am caroline hyde. this is the "best of bloomberg technology," where we bring you all of our top interviews from this week in tech. coming up, the u.s. hits russian officials with sanctions over what washington says was an unprecedented attempt to interfere with the presidential election. plus, the rise of the robots with u.s. jobs in the crosshairs. we'll discuss whether humans and a.i. can peacefully coexist and we'll take a look at the biggest tax break news from 2016, from
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personal a.i. assistance to reusable rockets becoming a reality. but first to our lead, the obama administration has imposed sanctions against russian officials and state institutions in retaliation for hacking democratic party emails. it's the first public retaliation for what u.s. officials said was an unprecedented attempt to interfere with the 2016 presidential election. we spoke with former cia analyst and now senior policy adviser for the counter extremism project. >> there are nine people and entities mentioned on this sanctions list. crucially there are two really big names. one is the fsb, the inheritor for the kgb, so russia's prime intelligence agency. the other is its military intelligence service, the gru.
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so, i mean, we've been speaking to analysts all afternoon who say, you won't necessarily see individuals at the gru targeted as a result of being mentioned there, though individual members of the gru are actually mentioned as among the nine. but it's sending a huge signal from the obama administration saying, pointing out the sort of seriousness of their intent to name and shame russian individuals and entities as they press ahead looking for ways to punish russia for the election related hacks. caroline: the name and shame approach has been used by the obama administration before, but could there be any culvert actions going on as well? >> absolutely. you see this move today. this is the obama administration's parting shot against putin. this is the diplomatic sanctions, the expulsion of diplomats and sanctions.
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having said that, that does not close the door to covert measures or potential covert cyber measures, and we may or may not know about those if and when they happen. obama did imply this may not be the last of the retaliation from the united states on this which would seem his days in office are waning so if he's going to do anything else, if this administration is going to do anything else, we're probably not going toe so it. the russians today came out saying they are likely to retaliate, so one thing to watch, is to see if the united states faces any additional cyberattacks from the russians in upcoming months and whether or not the trump administration rolls any of this back when president elect trump takes office later in january. caroline: the fact that we're hearing already from the fact that russia might bring these countermeasures as soon as tomorrow, what are the people you're speaking to reacting to, potentially bracing themselves from russia? >> i mean, what we would likely know about in that case would be an expulsion of american diplomats. these things tend to operate on a tit for tat basis.
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you expel my diplomats. i'll expel yours. so that would be a very public move. one of the things that the obama administration was weighing in the last couple of months, these are discussions they have been having for some time, is how far down this path they want to go, because if they continue with covert actions as well and press ahead with action that is would perhaps attack russian infrastructure or wipe hard drives owned by hackers or delete their bit coin accounts, or what ever it is, then you are really getting into almost a cyberwar type of situation and that could escalate much more quickly. this isn't why you the sort of expulsion of diplomats which has history. there is a long historic precedent for that over years and years, but when you come to really escalating cyber war between two major world powers, you know, that's something the obama administration and the trump administration would want to consider very carefully. caroline: interesting you mentioned the trump administration.
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we've heard that, of course, these sanctions were in many parts bipartisan. we saw across the benches either side wanting to push for such action, but it looks as though donald trump himself perhaps has been a little cooler to want to see any rapprochement with russia. we heard him speak yesterday. let's have a listen. >> i think the computers have complicated lives very greatly. the whole, you know, age of computer has made it where no one knows exactly what's going on. we have speed. we have a lot of other things, but i'm not sure you have the kind of security that you need. caroline: he sort of says everything and nothing there, the fact that he wants people to get on with their lives. what do you think is going to be the reaction of donald trump when he moves into leading the country? will he unwind all of this? >> i think what you saw today is a move that needs to be taken seriously. it's sort of unprecedented, an executive order was revised to include deterrence against anybody messing with any of our election infrastructure. that's now included in the
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executive order. so if any individual in the future is to take any sort of cyberaction that affects the election in any way, leaking of emails or attacks on election system themselves, that's part of u.s. policy and president obama's executive order is that we'll retaliate with sanctions. it remains to be seen how trump will react. to say that computers complicate our lives doesn't seem really like a policy response. cybersecurity is one of the foremost threats the united states faces in terms of cyberattacks on our infrastructure, cyberattacks in terms of economic espionage on private companies, on our facilities like the pentagon, on our nuclear facilities potentially. this is a serious issue, so to just brush it aside with the remarks last night doesn't really demonstrate a clear cyberpolicy and it will be interesting to see what donald trump does in response to this russian activity when he takes office, and also the action taken by the obama administration is not just about russia.
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part of imposing sanctions, diplomatic or economic, in response to a problematic behavior, in this case, a cyberattack that impacted dnc servers and emails, is to deter future nonstate actors, future state actors, from doing this sort of activity again. so, taking a position on this is key to prevent that. not just in terms of punishing russia, and i think, you know, this might actually help the trump administration because perhaps we'll see less nonstate actors meddling in terms of hacking into email servers like this. caroline: just to take it global for a moment. of course, we've got french elections, german elections, netherlands elections, to name but a few next year. we know that russia's actions are not just limited to the united states. there are reports from t.k. press over the weekend that may be the uk is exposed as well. how much do you think this is a global issue? will other countries come in behind the united states? >> it will be interesting to see whether or not, particularly with the administration sanctions that went into effect, if european countries will follow suit and also designate those individuals and entities and not engage in financial transactions, trade and whatnot. so again, you might see europe take action if they are the victim of the cyberattack.
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i'll be curious to see if europe jumps on-board with the u.s. they may well. it's in everyone's best interest to make these multilateral and take a firm stand on this together. caroline: that was senior policy adviser for the counterextremism project and bloomberg's foreign policy reporter. this week, the u.s. accused three chinese hackers of making more than $4 million in illegal profits after hacking the servers of several new york law firms. it is alleged that they bought shares in at least five companies before deals were announced. some of the transactions involved chipmaker intel and a drugmaker. the sec filed a parallel civil complaint and is pushing to freeze their assets. coming up, holiday cheer echos for amazon. why tech gadgets won out as shoppers got mobile. and a reminder that all episode of bloomberg technology are live
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streaming on twitter. check us out at bloombergtechtv. this is bloomberg. ♪
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caroline: the consumer came roaring back this holiday season, making its biggest gain in more than a decade. could the boost in sentiment pay off for the retail sector during the crucial holiday season? well, certainly there were signs of consumer strength in the online space. amazon reported its best holiday season yet, having shipped one billion items. we dug into the online retailer and its record sales of alexa devices with consumer reporter sean and bloomberg editor at large cory johnson. >> amazon is very fast and loose
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with the numbers they throw out. the fact that this was the biggest holiday ever. if it wasn't, it would be a disaster, because the expectation was for 25% year over year sales growth. we don't know how many they sold last year, so we don't know what that number means, and the company is reticent to release actual figures. rbc capital markets estimated about midyear the company sold about a billion dollars of alexa products for perhaps very little profit, but the motion that it could be a much larger number coming in. let's say three times that number, it starts to be a significant number, maybe not on amazon's scale where they are expect to do about $45 billion in revenues for the quarter. but still, selling a lot of things is good, not just because it works for amazon, it creates an effect. one of the things we found out with a study earlier this year, the more they use amazon echo devices the more they use amazon. in the same way amazon prime
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customers become more frequent customers of amazon. caroline: shannon, great to have you on the show. give us a sense of the mobile element that you're covering, how much? there used to be a buoyancy. >> well, yeah, and i think before the big brick and mortar retailers, people talked about the app, it's the battle of aps. they know consumers are only going to be using a couple of aps on their phone. amazon is really dominating that space. maybe there are a couple of other retailers who can make a dent to have the app on your phone, that you're using, in real-time or things while you're lying in bed at night, price checking from your app. so i think more and more, the debate is not going to be around checking from your app. who has the best website, but who has the best app and best mobile platform because that's
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where consumers are moving in the retail space. caroline: so all brick and mortar are playing catch-up. are they managing to lock in some of this payment? >> i think they are obviously doing better than they were a couple of years ago, but when you listen to cory talking about amazon and the sales of alexa and the way amazon just continues to dominate the space and is drawing more and more consumers into their eco-system with prime, with alexa, and excellent, the harder and harder it gets for brick an mortar retailers. it's sort of like amazon is always two, three, four steps ahead of them. as soon as they get a great website, amazon has a great mobile app. as soon as they get two or three day shipping, amazon is doing one-hour shipping. they get a good app, now they have got something like alexa to compete with. they are trying, obviously, but -- and they are making some progress, but i don't know if there are any signs of slowing amazon down. >> it's also interesting if you went to the press release, amazon released, again without any numbers, they went through
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category by category top selling products, and they were wonderfully random and weird. i went through probably 30 of those items. what i noticed these are cheap items. it was a power cord for $7.99. a bathtub baby toy for $6.45. the prices were so low that the expectation might be that amazon has virtually no margin, but by driving so much volume and having tiny bits of margin they are taking money away from other retailers as shannon is pointing out, and that changes the nature of retail to push it more towards amazon. caroline: that's fascinating, the way in which -- who has won out, particularly today, shannon, consumer confidence, best in 15 years i was really intrigued by not only the breakdown from a generation point of view, consumers seem to be positive, if they are over 35, millennials, they aren't sounding too confident but if you're a closed seller, it's not a pretty place to be. >> to mention cory's point, amazon is now getting into apparel, one more thing retailers have to compete with. yeah, this year for apparel, i
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don't know if it will be catastrophic, but it won't be awesome. and give wherein the consumer is at it could be awesome, but the consumers are just not wanting to spend on apparel. there is not innovation going on. there is a lot more excitement happening in other areas like tech, where they would rather be spending their money. so the retailers were forced to offer bigger discounts than ever this year, so maybe able to get the same number of presents for the same number of people, but you paid less and the retailers got a smaller margin. so i don't think we're going to see -- nothing really has changed, at least this holiday season compared to last season. maybe an incremental benefit but not a huge boost. >> 63% of millennial voters voted against donald trump. so that may have actually a big weighting in terms of the optimism that those people feel.
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if 63% of the populace votes against someone and that person wins, they aren't feeling good about anything right now, so the time period in which they were polled was during the trump transition team coming together and that may have had an effect on consumer confidence for millennials, maybe not affecting the way they are actually spending money. caroline: bloomberg editor at large cory johnson and bloomberg consumer reporter shannon. as we just discussed, the echo has proved to be a massive success for amazon. the a.i. powered smart speaker shows there is a lucrative consumer market for voice activated system in the home. something apple can no longer ignore. ♪ >> the top five most valuable tech companies in the world are all betting big on the success of virtual assistance that respond to voice commands. the race really started with amazon's surprise hit, the echo, powered by a digital assistant named alexa. >> alexa, how many championships has dan morino won? >> dan marino has won zero championships. >> alexa, how many oscars has baldwin won?
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>> alex baldwin has won zero oscars. >> alexa, stop. >> echo debuted in mid-2015 and by april 2016 consumer researchers reported that amazon had already sold more than three million devices. and it was cheap, selling for the relatively low price of $180 a pop, but the real pay-off was in amazon's core e-commerce business. >> more importantly, it actually adds into the ecosystem that amazon has where they only have a bunch of traffic coming to their website, but this is a chance for amazon to grab the traffic, which is not online. >> echo owners are spending an estimated 10% more time on amazon.com after buying the smart speaker. and amazon stock has popped more than 70% since the echo came out in the u.s. so it's no surprise google wanted in on the action. >> credit to the team at amazon for creating a lot of excitement in the space. we have been thinking about our own unique approach and we're getting ready to launch something later this year. >> that something was google home.
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it hit the market in october, priced $50 less than the echo and loaded with google's own conversational interface, which leaves with us the elephant in the room. >> hi, it's me. it's sure great to be on the mac. >> apple's assistant sira has been out for five years since it debuted on the iphone 4-s but it's use has been mainly used to the iphone, which could be a problem for apple, because by some estimates only 20% of smartphone owners actually use voice of assistance like siri on a weekly basis. >> it's so important of a category and amazon has so proven that there is a customer demand and that it's a sexy new nd of interface for information, that apple would be insane not to get out the with a product that's similar. but it's all about the implementation, and it's also going to be a real disadvantage not to have been first. >> but then again, apple wasn't first with the smart phone or tablet market either. and back in september, bloomberg reported that apple is, in fact, pushing ahead with an echo style competitor. so we can only expect this
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market to keep growing in 2017, with idc forecasting shipments jumping 130% to 21 million. ♪ caroline: and we'll bring you more on the breakthrough tech of 2016, including the hits and the misses in the quest for reusable rockets. that is a little later. volkswagen is making another move to expand europe's biggest carmaker for manufacturing into mobility services. vw is buying canadian mobile market operator pay by phone. terms of the deal were not disclosed. pay by phone has posted more than $215 million in transaction this is year 12.5 million customers. responding to industry wide technology developments such as mobility services, automated driving and electric powering systems as the company emerges from its diesel emissions cheating scandal. tesla and panasonic are stepping up their partnership announcing they will begin production of photo cells and modules next year at a plant in buffalo, a city in upstate new york.
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panasonic is vessel roughly a quarter of a billion dollars in the venture. it underscores deepening ties between the two companies, jointing building a factory in nevada. after the break, we'll find out how a robot is helping the immobile to become a wire with thought alone. that special report from chile, next. this is bloomberg. ♪
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caroline: welcome back to the "best of bloomberg technology." jerusalem-based software phone mobileye announced a partnership based software firm announced a partnership with a mapping consortium of several germ an automakers. this is one of several forged a this year as self-driving
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technology rapidly grows. under the deal, mobileye software which uses sensors and data analysis, it will be integrated into his navigational mapping technology. shares rose on the news, the most since august. this year bloomberg business week's ashl has crisscrossed the globe to see how pioneers in different countries are pushing the limits of technology. in the season finale of "hello world" he travels to chile to see their unique take on the incubator concept. take a look. ashlee: it's called the idea factory. or if, for those in the whole brevity thing. they support tech. politicians stop by to smooze. kids get a chae to learn. it is t a factory design to build the next google or facebook. it focuses on things for chile and south america, and they have hyper local branches hidden in unexpected corners of santiago.
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there are tech incubators all over the world, but you won't find many in a neighborhood like this. it has another building here that's been set up to inspire local youngsters and give budding inventors a helping hand. ♪ >> here, things are a bit more lively than in palo alto. and it suits the place. i showed up on a demo day when kids from the neighborhood pour through the gates to check out if's catches. there was plenty of eye candy, but nothing beat this. >> hello, robot. >> it's like every other video conferences robot on a stick, but this one is basically lethal. >> that's so cool. ♪ ashlee: all ofhe gadgets come from this man. he's something of a local celebrity and has kanye west levels of passion. >> [speaking spanish]
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>> roderigo at of revelation and became an entrepreneur. his most inspired invention is this whole chair. people can control it by tilting their head or making a gesture. soon roderigo hopes it will move by thought alone, by reading impulses from a brain wave monitor. >> [speaking spanish] ashlee: his helpers were surprisingly gentle as they gave
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me the power of telekinesis. one, two, three. >> oh, my god. ♪ [laughter] ashlee: that's crazy. amazing. caroline: and you can catch the full episode of "hello world" this weekend on bloomberg television. plenty more still to come, including man versus machine. we take a deep dive on what a more automated world needs for your prospect in the coming year. if you like bloomberg news, check us out on the radio.
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you can now listen to bloomberg radio app, bloomberg.com, and in the u.s., on sirius xm. this is bloomberg. ♪ ..
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have cable tv reached a tipping point you go with pose that question the cory johnson and gerry smith, bloomberg news media reporter. gerry: you think about the television industry, it is like a slowly melting ice cube. there are still about 98 million people in the u.s. that subscribe to pay television, but they lose a couple million subscribers each year.
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and eventually come you know, media companies look around and say this is not an industry that is growing anymore. maybe we need to partner up and find someone, maybe another distributor, or to a merger with another media company potentially. everyone is looking around in the fast changing landscape and looking for some security. caroline: not an industry that is growing tv, but there is an industry growing on the back of it, the likes of hulu, netflix. are they really disruptors and all ofhis? cory: i thk this over the top notion of subscribing tv is very different. it is a clear and present danger to the existing media companies, and i think they know that. we can we responses, time warner has had great responses with hbo go products. and other companies are struggling with these things, but i think there is also a belief that under a trump administration, they will be much more business friendly and let businesses do what they will. look, the reason they have been opposed by the the justice department, some of them did not happen because they knew they would be opposed by the justice department is because there were more democrats on the fcc. and the justice department is different under different administrations.
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the reason they opposed it was because it was bad for the consumer. it will not be different based on who is in office, but the approval of these things might a different. caroline: we just heard cory talk about the way media companies responded, some of them offering skinnier bundles, not all 100,000 channels, or options. is that catching on? gerry: we are seeing more and more of that. just recently at&t introduced directv now, which has a starting price of $35 for 100 channels, but the price goes up. it remains to be seen how popular these are, but if they do catch on, there is a real threat to a lot of these smaller cable channels. some of these media companies
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have more than 20 cable channels, and a lot of them get little viewership. if these packages catch on where there is only 20 or 30 channels in them, we will see marginal channels potential get shut down. caroline: i imagine we will see a few of those names next year, cory. cory: it matters from the editorial standpoint. on the news basis, we want lots of news providers, not a few. on an entertainmbasis, we have seen great programs come out of netflix, house of cards, luke cage. we have seen the se thing t of amazon, where we have seen the man in the high castle, transparent, some shows that would not have seen the light of day were it not for experiments in other places to broadcast, and our society is richer for it. so this should concern consumers
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in, not just the balance sheet of the businesses involved. caroline: we have seen the older guard consolidating. what about the new kids on the block? amazon has a lot of cash you can put to work. jeff bezos has been flashing there. gerry: there is always some speculation going on. there was speculation about netflix, and disney at one point this year. another company we have not mentioned is buzzfeed. nbc has invested $400 million in buzzfeed, and i think we are going to start to see more and more of these old media companies and digital publishers joining forces because the old companies want their younger audience, and the buzzfeeds of the world really like the money that is in television. cory: to that point, the buzzfeed deal is a g route. it is the eigh round. netflix is a business that does not generate free cash flow.
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we might expect the same thing about hulu. we don't know their financials. we don't know the financials of amazon prime. right now, there is still a frothy market. we will see if businesses can be supported by wall street when they can't support their own operations. that is the thing that could decide investment. if the rules of the road were to change, and netflix cost would rise, that could affect the valuation. disney could get a much cheaper deal. right now, netflix can sustain themselves thanks to wall street. that sort of activity keeps acquisitions from happening anytime soon. caroline: that was cory johnson and bloomberg news media reporter jerry smith. donald trump has credited softbank's masayoshi son for bringing jobs to the u.s. sprint will create or return the positions to the u.s.
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the company has yet to talk about these, but they will be in customer care, sales, and other functions. this came weeks after japan pledged to invest $50 biion in s. eno, and th are part of his overall 50,000 jobs commitment. donald trump: so we have a combination of sprint for 5000 jobs, and that is coming from all over the world, they are coming back into the united states, which is a nice change. also, one web with 3000 jobs, a new compan and we have gone through masa, a terrific guy, and we appreciate it. caroline: it has been trade and globalization that have been blamed for the widespread manufacturing jobs in the u.s., but some are pointing to a different culprit, robots. with driverless carsnd chat bots doing things that humans usedo do, how will this disrupt industry as we know it? what can the incoming workforce do to stem the tide? we discuss this.
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dennis: in 2016, we have heard a lot of discussions form around trade policy. in reality, you look at the numbers, a lot of job displacement comes from technology automation, u.s. manufacturing as an example. if you look at the output volume, it is near the all-time high, but over decades, the number of people that industry has employed is down 7 million jobs. the vast authority is due to technology automation. not necessarily from globalization. caroline: so productivity seems to be on the up thanks to robotics. there was a great study out of oxford saying half of jobs are at risk due to machines. are we going to perhaps a bit of a bill gates situation where this actually underestimating what happens in the shorter term, under estimates the
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long-term? could this be more of the jobs? dennis: i think it will be a general trend. it tends to accelerate. it is different from immigration policy or globalization, where you can create policy to stem it. in technology, not only does it tend to accelerate faster, you cannot un-invent things. you think about the nature and the pace of change, things are always going to appear faster than we expect them to. caroline: so faster than oxford? dennis: this year alone, the big items we were discussing in the mainstream. one is autonomous vehicles. that will have a huge impact on the trucking industry, one of the hugest employers in the u.s., and the other is on self-serve kiosks. millions and millions of jobs could be affected, and that is just on the low end. as technology gets your powerful, you have to think it
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will displace more high-end jobs as well. caroline: so this is helping re-skill or up-skill workers. does the government say donald trump coming in in just less than a month, will we see a focus on re-skilling? should there be a larger safety net for those who potential can't be? dennis: training has to be a part of that conversation. that is certainly what we do. so, if you think about it, there are two things we think about. the first thing is this notion of lifelong learning, people working longer, conversation on on education is in the first stages of life, but the world of work is changing quickly. people need to constantly learn new skills. the most important valuable skill an individual can have going forward is the ability to learn something new, because it's going to be really difficult to predict the future world of work. caroline: you are coming in here, and you are talking about
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this. i want to know how much of 2017 will some of the startups, of course, we have seen some of them fighting back and particularly disruptive industries. we have seen worldwide effects not just in the united states but in germany and the united kingdom, taxi companies fighting off the likes of uber. change is coming. you talk about a fourth industrial revolution. do startups and companies that are doing the disrupting need to talk out more about this and the ways in which people can be helped who might indeed lose their jobs? dennis: absolutely, that needs to be a part of the broader conversation in so far as lifelong learning is really a new technique of education. in the past, most people think of education in the early years, k-12, higherducati, if you are lucky to have a diploma -- it did not matter what happened afterwards. this goes back to the notion of lifelong learning that the need to constantly reskill the jobs you do have to stay relevant.
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caroline: dennis yang. another tech company is planning for an ipo. they plan to list on the nasdaq under the ticket appd. they help companies check out their apps are running so they can respond swiftly to connection slowdowns or crashes. facebook has more competition in the live video front. twitter has updated its streaming service, periscope. it will now show 360 degrees live videos that can connect directly onto the service. this move is part of a renewed focus on gaining traction during live events. the feature allows users to tilt and rotate their phones for a full panoramic scene. coming up, the short-sellers warning that rattled nvidia. will one of 2016's greatest stories become a cautionary tale. this is bloomberg. ♪ caroline: it was a big week for
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chipmakers. qualcomm was slapped with an $853 million fine in south korea for antitrust laws, raising questions for the profitability of the licensing business. while the shares in nvidia fell the most in 19 months. an analyst came out bearish on the company, saying it belongs at $90. we broke it down with cory johnson and ian king. ian: there are a lot of risks which everybody has been pointing out for some time. he is not breaking new ground. he is saying that this is a company which has done well in gaming, and put up a lot of growth. it has come from gaming. the automotive stuff, that is fine, but they are relatively limited at this point. he is pointing out with a new news story has been. it is a lot of competition.
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caroline: i am checking out the rsi, relative strength index, it was above 17. we are now passing back down after the slump. with $90 as the call, that is 18% to go. how much should we be listening to these calls coming from andrew left? cory: andrew left is a genius, but maybe not in this case. caroline: he did not talk about valeant pharmaceuticals. cory: he has done some good calls over the years. he does some really good research, or has access to some really good research, but it tends to be more of an obscure name. when it comes to big cap names, overvalued things, i don't think that is his very best suit in video, facebook for example. his research is not so unique and out there on his own. he is just kind of calling into question valuation issues, not
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fundamental issues with the company. again, he does some really terrific work on smaller names, but it is not his best work. we will give him a break. caroline: it did not quite wipe out the moves we saw yesterday. give us a sense -- qualcomm. we are finally getting the fine coming out of south korea, but this just after china, it is not the only place we investigated. ian: $800 million for qualcomm is nothing. there is a lot of money floating around there. people have much more important things, much more concerned about the business model, 70% of the profit comes from licensing revenue. so anything that potentially affects how they are able to let the licensesn firm a big deal, and that is the key militant concern that has been there and is manifesting itself.
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cory: it seems like this also gets to the core of how qualcomm is and how it is different from most chipmakers out there, not just because it relies on intellectual property or licenses or inventions as opposed to selling the physical chips, but also they had with that business model achieved market dominance. such that their licenses, their technologies are written into the very codes that make this work. you really can't make mobile telephony without qualcomm chips. ian: that is their argument, without us, it the world would not exist. we should be getting our cutter back. so far the -- you have got to remember they have been battling in and out of the courts about
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the very fundamentals that south korea found them guilty of transgressing yesterday for years, literally for more than a decade. what happened is they tend to win. caroline: in china, they have had to reorient the way they price their products? ian: that is one way of looking at it. the other way is how the stock market looks at it. they were really allowed to do business in china at all. so fair enough that this is a reduced rate. that is not a great trend. cory: that seems like a glass half-full reaction to the news out of china when that settlement happened. fundamentally china says, you cannot do your business here at .all. but then they have to do it at such a lower rate -- i'm curious what you think about the argument, the korean argument, that says they can't or they should not be allowed to build against the entire handset, just
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against the chip. how could that differ in their regime of structure? ian: that is an absolutely huge deal. this is something that they have had to fight around the world and in other places. in china, there was a concern what would happen in other countries. $700, looking at the full retail price, initially 5%, 3% of $30 is a lot less than what they are getting now. caroline: how much can this impact r&d -- this is their argument. the licensing, it helps refuel the research and development, but it also helps them in particular, gives them a leading edge. if qualcomm continues to see these concerns and the share price continues to drop, who is the beneficiary? ian: that would be the handset makers like samsung. that is what qualcomm would argue is behind this. they will be paying a lower rate. that helps their margins. caroline: nvidia might be different. is their anger against qualcomm in years gone by that perhaps they cut the market to drive out competition? ian: there has been no price gouging. the argument is they have built this market position to 100%.
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nvidia failed, and mobile they underestimated. it was nothing to do with qualcomm's actual power then. there were companies stronger than qualcomm in the past. qualcomm had the right technology at the right time. that gave them this initial lead. there are arguments about what they have done with this market power, but the technology decisions and bets that were made back at the beginning of digital were won by qualcomm. caroline: bloomberg technology's ian king and editor-at-large cory johnson. facebook and google reigned supreme in the 2016 app wars. they dominated the list of the top app according to nielsen. facebook was number one with more than 146 million average unit users per month, a 14% growth over last year. not to be outdone, the company known for the world's most popular search engine grabs the fifth spot on the list. gmail and other google services also made it into the top 10.
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coming up, we focus on the tech breakthroughs of 2016, looking at reasonable rockets. the hits and misses. that is next. this is bloomberg. ♪ caroline: 2016 was the year of
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populist movements from brexit to the trump election, but perhaps ironically the world's wealthiest seemed to benefit from the move against globalization, adding $237 billion to their coffers. that is according to the billionaires index. if you break it down by industry, technology fortunes for the second-best performing in the ranks. that is despite worries that a trump presidency might introduce policies that could hurt their companies. warren buffett holds the top spot, getting the most over the year, while microsoft founder bill gates and jeff bezos are in the top five.
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you can get a picture of the billionaires index, go to rich . 2016 was also a year of dramatic progress for the commercial space industries aiming to cut the cost of spaceflight. spacex and blue origin showed that reusable rockets are key to slashing the price. more attempts were added as well. we have a report. >> lift off of the falcon 9 rocket. >> 2016 proved there is a new kind of space race underway, one to develop reusable rockets and dramatically cut the cost of a launch. here is why that matters. spacex already leads the industry on cost at $61.2 million for a falcon 9 launch. its rival united launch alliance says it cannot get the price under $100 million until 2019.
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spacex believes that recycling the first stage rocket can slash the price, which is why it was so important. after failed attempts to land a rocket on a floating barge, spacex made history in april, doing a controlled landing on a moving target. recorded three more ocean landings this year and two on land. steve: imagine the impact for every one-way flight of an airplane you threw away. it would cost nearly $100 million. that is the rocket industry today. if you could reuse the rocket, it is like air flight. you would be able to fly around and be used again. >> it is not the only one. blue origin, which is run by amazon ceo jeff bezos, is also testing this. it has had five successes to date. but spacex's streak of luck ended abruptly on september 1. an accident while fueling led to an explosion on the launchpad. >> it is filled with liquid oxygen, so it is a mix.
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it is highly flammable. it does not take much to cause it to spark and cause explosion of this magnitude. >> that has had a domino effect on the launch schedule. spacex remains grounded had plans to resume flight in september or push to january. the manned mission has been pushed to may of 2018. experts are not worried about the impact on the industry as a whole. marco: in five short years, this has become the establishment player within the launch services industry, and to come so far in such a short amount of time and have had as few problems as they have had is really amazing. >> spacex has a backlog of 70 missions worth more than $10 billion. caroline: that was bloomberg's reporter. that does it for this edition of the "best of bloomberg
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technology." make sure you join us next week, where we are speaking with aol ceo tim armstrong. plus we will be joined by the fitbit ceo, james park. we get his reaction on the apple app store chart. and we bring you all the latest intact throughout the week. tune in every day. remember, all episodes of bloomberg technology are now live streaming on twitter. check us out at bloombergtechtv weekdays. this is bloomberg. ♪
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help to $1 million investment to discuss whether the strategies this year can be replicated elsewhere. and even though he won't be a member of president-elect trump's cabinet he gave his take on where president-elect trump can affect real change.

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