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tv   Bloomberg Technology  Bloomberg  May 31, 2018 11:00pm-12:00am EDT

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♪ emily: i'm emily chang in san francisco. this is "bloomberg technology." coming up in the next hour, the trump administration tariffs on steel and aluminum imports from the european union. a move condemned by america's closest allies. what it means for talks with china and global technology. arm is rolling out a new version of its most popular chip designs. will they shake up the semiconductor industry? we will hear from the ceo. amazon dominates e-commerce making up 40% of online spending
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in the united states. but could walmart change of the -- up the global landscape going forward? first to our top story. the trump administration has taken its most aggressive step yet against major u.s. trading partners. the u.s. has imposed tariffs on steel and aluminum imports from the european union, canada, and mexico. it is certain to lead to retaliation by america's closest allies. the eu has said it would take immediate steps to retaliate while mexico has vowed to impose duties on u.s. goods. commerce secretary wilbur ross says he is looking forward to more negotiations over the tariffs. joining us from washington dc to discuss it, simon lester, trade policy analyst and in london, bloomberg's caroline hyde. caroline, tell us more about the reaction in europe. caroline: one of depression, really. many speaking out. the head of the eu commission was on stage giving a speech when he learned of this particular news.
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he said it is a bad day for trade. notably coming he is also saying this is unacceptable. there is anger from the eu. the u.k. has been speaking out saying how disappointed they are by this action. it is the eu that is taking the biggest steps in terms of retaliation. we will get tit-for-tat. they will bring in their own tariffs aimed at strategic provisions coming from the u.s. particular exports that are born. we're looking at harley davidson. almost laughable. they are aimed at some of the key constituencies of the u.s. that are up for reelection. they are trying to be strategic about the exports they are targeting. notably, this is one of anger, hurt, and retaliation coming from the eu. emily: take a listen to what wilbur ross and what he had to say about this decision earlier today. >> concessions that were perfectly appropriate for the u.s. to make to europe, to asia,
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to everywhere in the immediate years after world war ii are no longer appropriate. the concessions were not time denominated. they were permanent concessions. that is a real structural problem. emily: simon, how will this be received around the world? simon: i think it will be received just like it is being received in the eu. as we just heard. i think canada and mexico have spoken out just as forcefully. these tariffs have been applied to china and a couple other countries. china has retaliated. already takings steps to retaliate. they are trying to play within the rules by challenging these tariffs at the world trade organization. that process takes a long time. i think we will see quick retaliation. other countries are not happy about it. they are expressing it. they will take action. emily: talk about china more
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specifically and what kind of retaliation we might see. simon: on these particular tariffs, china has taken retaliation. they acted right away. the tariffs have been imposed on them. similar to the other countries, they are picking out specific products and certain constituencies, certain regions within the united states to motivate members of commerce to act. -- members of congress to act. we have broader tariffs on china coming soon potentially. in the next couple weeks, we will hear much bigger numbers. these are relatively small. there is more to come from china. for now, we have the eu and canada and mexico about to retaliate. if the trump administration goes ahead with its tariffs on $50 billion of chinese imports related to intellectual property theft, then we will see more fireworks coming from china. emily: we heard from the director general from the world trade organization who cautioned
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against the moves that the trump administration is making. also said the status quo does need some improvement. take a listen. >> the wto was created in 1995. the internet barely existed. e-commerce was nonexistent. today, it is the biggest growing segment of the economy. so, yeah, we need updates. how deep, how fast, what kind, that is a conversation they need to have. what are folks in the eu having to say about the fact that the economy, technology, has evolved significantly since these rules were put into place, while perhaps they may not be happy with this solution, could it be something else? caroline: i think they are willing to try with the world trade organization and see how they can mediate between the u.s. and the eu. the eu has gone out to the wto. as soon as friday, they will be putting the complaint to the wto. saying this is not in accordance
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to their roles to see these tariffs of 25% slept upon steel for you -- for imports into the u.s. i think the w tal -- the wto knows that itself. whether it can administer that as a gets more complaints. i think the issue, as one analyst pointed out, the suffering is not going to be of eu exporters of steel and of aluminum. in fact, 5% of the production of steel in europe goes to the united states. who is going to be hurt here is global trade in general. when you think of germany being the fifth biggest trading partner of the united states, you can see that on the bloomberg. what the issue at stake here is further trade. i think this is where technology comes into it. autos and particular. this is while angela merkel -- what angela merkel is worried about.
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will we start to see tariffs aimed at the auto industry? could that hurt german products? simon, what would a better solution be? given some of what is in place may be out of date. simon: there are a lot of issues going on. with steel and aluminum, there is room for talks and discussions, alliances between the u.s. and the eu. canada, mexico, and japan. to challenge practices in this area. i think it is widely acknowledged that china does have overcapacity and does subsidize the steel industry. having everybody work together to address that problem is better than the united states trying to take on the whole world. in terms of updating the rules, it is very difficult, there are 160 four member governments. it is hard to get them to agree on anything, much less modernization. we have been trying to do that with nafta. the u.s., canada, and mexico.
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it hasn't gone well. if our focus on these trade agreements was on updating and modernizing, taking into account the development of the internet, i don't think it would be that difficult. i think part of the problem is a -- part of the problem is the trump trump administration is going beyond that. they are trying to attack things like bilateral trade deficits. i think once you start down that road, it makes it more difficult to do a more basic fundamental modernization that we all agree is necessary. emily: what are you going to be looking for over the next days and weeks? in terms of signs that progress may be made to avoid some of these additional proposed tariffs or that we may be moving into the opposite direction? simon: one big issue is the u.s.-china trade relationship. we know wilbur ross is going to china from june 2 through june 4. perhaps we will see progress there. i am not that optimistic about it. there is a chance we will
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relieve the tensions which are feeding all of this. in terms of the steel and aluminum tariffs, it looks like they are going ahead. we have heard, things can always pull back. things can change moment to moment. it looks like the u.s. will impose tariffs, we will see what the retaliation looks like and whether that triggers as -- those governments to sit down with the u.s. can they find a solution? they haven't been able to resolve these so far. but maybe with the pain being felt by specific companies, that motivates people to make compromises and find a solution. it is hard to predict. we will have to see how things go over the next few days or weeks. emily: simon lester in washington and bloomberg's caroline hyde in london. thank you so much. we will continue to follow. meantime, zte may be taking
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steps aimed at getting off the u.s. blacklist. bloomberg has learned it has replaced its most powerful executive. china is trying to persuade the u.s. to lift a seven-year ban of zte's purchases of american technology. president trump said he would allow the company to resume business if it paid a $1.3 billion fine and changed its management. coming up, what do apple, qualcomm, and samsung have in common? they license or pay for chip designs. we will speak to the ceo about the new wave of chips coming, next. if you like bloomberg news, check us out on the radio. listen to the bloomberg radio app and on sirius xm. this is bloomberg. ♪
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emily: when it comes to microprocessors, the chips that power everything from your smart phone to your voice activated speaker, things like qualcomm might come to mind. one company has chip technology that touches nearly 95% of smart phones globally. that is arm. it's customers have shipped more than 30,000 chips to date. now they have their new chip, one they say will deliver a 35% year-over-year performance increase into a new foundation it is built on. a chip that will be found in both smart phones and windows laptops. here to tell us more is the ceo of arm, simon with me in the studio. you are unveiling a new set of designs for processors and graphics that will form the basis for more powerful smartphones. and you hope, more laptops. what is so transformative about
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this new design? simon: what we have launched as an update to what we call our premium mobile product line. it is a compute platform that is found in many of the smartphones you mentioned. over the last 5, 6 years, what our engineers have done is deliver a 20% improvement. this year, through a lot of hard work in the way we have done the design, we have achieved a 35% performance outlet. that is significant in terms of the performance that will be put in your handset. it will be delivered to the -- deliver the benefits we see in smartphones. all day connectivity, it will deliver those features into laptops. that is really exciting. emily: for me, using a smart phone, how will my experience be different? simon: better performance, your apps will load faster, they will perform faster. with the coming 5g technologies, that is going to open up a whole new class of application that we
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believe will need high-performance processing. this platform will deliver it. emily: despite the advances in technology, over the years, we still have not seen a dent in intel's profitability. in their dominance. why would this time be different? simon: the thing about laptops, what you need for that is good performance in the underlying processor. you need the right software platform. what we believe this technology does is bring that together in combination with that with the connectivity, lte. it creates a new class product. if i'm traveling around, with my laptop, i'm pairing it with my phone for connectivity, it works but it does not have the convenience that we have all come to rely on in a smart phone. putting all of these technologies, high-performance processing engine, the right software, all of that connectivity creates a new class of experience for a laptop user. emily: i know you love all your customers equally. but which of them do you think will step up and trade up?
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if it is indeed trading up. simon: in general? many of our partners are providing chips into the smart phone sector. there is a reasonably diverse range of companies in that space. in the laptop now, the first products are out there. there were three announced laptops. they are supplied by qualcomm. qualcomm has integrated our processing technology with modem technology and everything else they know how to put into a chip. they are the first class of the product. emily: you mention qualcomm. they have been caught in a string of issues. they are retreating from their attempts to get into the server business where intel is the incumbent. do you think any other chip company out there can step up and pay the big bucks necessary to make a go of it? simon: we will see what happens with qualcomm's chip comes out which is really good by the way. at the same time, there are other partners in the space. cavium has been in the space a long time. they just launched their second generation design.
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that is being shipped right now in hp servers. recently, there is a new company that have taken the technology that was developed by applied micro, they have a strong leadership team that built out the technical team, and we believe they will be successful in the space as well. emily: arm is part of softbank. i know you have said this gives you more flexibility. how has being part of softbank had an impact? simon: it has been quite a broad for us. it has been a fascinating tubing -- a two years. emily: you have been at the company for 27 years. simon: i have seen a lot of changes over that time. the last few years has been great for us. it has given us the opportunity to invest and plays bigger bets on more areas of technology. emily: like what? simon: if you think what is driving technology right now, one of the big macro themes is 5g. not just what is happening in
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the infrastructure of the network, but the applications it will enable. how iot enables ai. how ai will enable a whole new class of applications. and new businesses. as we look at that, we see the opportunity for many different new technologies, evolution of our products. we are able to invest significantly in the delivery. emily: how much love do you get sun personally? simon: i speak to him regularly. we have board meetings. i'm on the softbank board so i get to speak to him through that. he is interested in what arm is doing. it -- just today, they announced $2.25 billion going into cruise. that is a great example of how they are stringing it altogether. a lot of investment into that in the future of automotive. emily: how central is arm to that strategy seeing all these other bets he is making?
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simon: all of these technologies rely on more computing power. they rely on conductivity. our strategy is to provide engines into all of these different applications. emily: there was a report that last year was the first year that smart phone chip growth is stagnant. how will that impact your business? simon: our technology and design is aimed to do a lot of things. you mention 100 30 billion ships last year. our partnership, 21 billion. there's about 1.5 billion smartphone chips every year. we are in lots of things. emily: 95% of smartphones. simon: every smartphone is a great place to be. that is a market that will continue to grow. albeit slower than it has. the computer power coming into smartphones is going to increase. meanwhile, as i said, you have got the deployment of 5g, you have the growth of imt, you have computing, microprocessors, more computer power going anywhere and everywhere. emily: in a year, in five years,
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how will the market share be different? simon: for smartphones, i don't think it will be that different. our job is to maintain that market share. emily: what about laptops? simon: we would love to grow into that. the numbers are small right now. but we see that as an opportunity. similarly in other spaces, as they grow, we see the opportunity for more arm deployment. emily: all right, thank you. coming up, softbank makes a big investment in gm's autonomous driving unit. we will hear from gm's president later in the show. that is next.
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emily: fresh off of the financing round that included softbank's vision fund, china's full truck alliance is speeding ahead with expansion plans. the cio tells bloomberg television how he plans to use the fund. >> we will divide up the
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funding twofold. one is for potential acquisition in different business areas to grow. >> how much are you setting aside for acquisitions? >> that is what we are talking about currently. not for public consumption. the other portion of the money is to fund our existing growth. emily: meantime, softbank's vision fund will invest $2.25 billion into gm's autonomous car unit. america's largest automaker is taking on google and other tech companies in the battle to dominate the self driving car business. bloomberg's david westin spoke to gm president dan ammon about the investment. dan: it is a pretty exciting next step on our road to deport these vehicles in 2019. as you said, everything we are doing on the path to that point in time is all about safety and safety being the overriding priority to all of our development of around av. we think we are on track to deliver that.
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in a complex urban environment at scale in 2019. david: one of the things you will have to do is you will have to go through the national highway safety administration. what will the process be like? are you confident you will get approval? dan: as i said, the overall approach and one of the biggest benefits of this technology is all about safety. that is the objective we are focused on. we look forward to working with them to explain our approach to the technology and why we believe we will be ready to deploy in 2019. david: give us a sense, because you understand this, of how much more complex it is to be in an urban environment than some of the things we have seen already. dan: we are deploying -- testing on vehicles in san francisco the one hand, and also in phoenix and arizona on the other. those are two different testing environments. our vehicles driving in san francisco seymour -- see more in one minute then vehicles in phoenix see and one hour. that gives you a sense of the level of complexity we see in a
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complex urban environment. that is why we are focused on testing in that environment we -- because we encounter more, our vehicles will learn more quickly. it puts us in a better position to be ready to launch in those environments. david: as we are speaking, we are showing viewers the bolt with the cruise on the side of it that you will be doing. where are we in the longer curve of this adoption of evav as well as ridesharing? how soon will this come? dan: i tell you, it is a very early days still. we're at the beginning of what we see as a long-term very fundamental transformation. we do believe this technology will change the world and a significant way. -- in a significant way. obviously, we are talking about first appointment in 2019. -- the employment in that will 2019. be the very beginning of what will be a very big rollout of this technology overtime.
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emily: gm president dan ammon on bloomberg television. coming up, has walmart gained the upper hand in the competition to dominate the global e-commerce market? we will discuss, next. bloomberg technology is livestreaming on twitter. you can check us out and follow our global breaking news network on tic toc on twitter. this is bloomberg. ♪
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♪ emily: this is "bloomberg technology." i'm emily chang. this week, amazon and walmart both holding their annual shareholders meeting. outlining accomplishments of the year and goals ahead. this is competition between the two companies heats up. walmart has been making aggressive moves to catch up to amazon. most recently with the purchase of a 77% stake in india's market. for more, we are joined by a former executive at amazon working on retell merchandising -- retail merchandising and supply chain. now he is ceo of glimmering commerce. it is a tech platform that works with the retailers. what is your assessment of amazon versus walmart?
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guru: if you look at india, it is the biggest, one of the biggest acquisitions the tech industry has seen. in the recent past. there is a reason to that. it is the only company in the world that has been able to keep amazon at bay, and is still a number one player in a large economy like india. leaving china alone, they are not so much an open economy. with walmart acquiring that, they are not just getting a stake in it and e-commerce play, but they are getting the dna on how to succeed against amazon. emily: how big of a loss is it for amazon not to have that foothold in india? guru: it is not that they don't have the foothold. they are massively growing. amazon has come out publicly stating that in many cases, they are bigger than walmart in some metrics. growth has been phenomenal for both companies.
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a lot of it is because of the market dynamics of e-commerce in india. amazon is making a major push. they're very localized in their presence over there. they are making a big push with the sector marketplaces. really giving very local advertising and marketing for attracting consumers in india. emily: how does this set amazon versus walmart up for global e-commerce war? where is amazon winning, where is amazon losing? and the same for walmart. guru: the battlefield has become e-commerce. it is going back to how walmart dropped the word stores from their name and now it is walmart, not walmart stores inc.. the battlefront has become e-commerce. it is being won through technology. walmart is going through a pretty massive dna change. they are going through -- they are acquiring companies like jet.com, and they are putting
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foundations for how to fight with companies like amazon in the future through a dna change which will look very messy over the next decade or so. that is the way they will go to the battlefront. amazon is coming from a traditional angle of going with technologies and consumer flows. they don't have to do a dna change. that is their dna to get that on the heels of technology. emily: amazon waging a war on prices across the board. can walmart keep up? guru: it will be hard for walmart to keep appeared walmart -- to keep up with that. walmart will have to shed a lot of money like they did $14 billion is a lot. and think about the price reduction. amazon hitting 100 million prime subscribers. that is $12 billion in free cash flow coming into amazon every year.
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they take all those profits and are investing back into growing the marketplace and also it is very high on amazon which is a high gross margin as opposed to the the traditional business. this is going to make amazon a lot more powerful in their ability to offer a great prices, excellent service, on the heels of prime. and walmart is going to have a big struggle to fight against that. emily: amazon adding new deals all the time to prime. free two our delivery -- hour delivery from whole foods, a subscription from the washington post. how can walmart fight the weapon that is amazon prime? guru: if you think about how walmart has been succeeding in the past, they have optimized a lot on their supply chain and so
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on. that is what we are seeing both of these companies doing for subsidizing these price wars happening. they are going back to the supply chain. they are going back to their vendors. publicly traded companies like kellogg's, they are starting to see a huge amount of pressure coming back, because they are starting to fund this price wars -- those price wars and a lot of senses. this war will not just be limited to these today -- to these two companies. it will have a big effect to other manufacturers and for them to survive and succeed in the age of less profitability. emily: what is amazon's achilles heel? guru: right now, it would be china. they have not been able to break into china. they still haven't figured out brick-and-mortar. the majority of sales are brick-and-mortar groceries. groceries is a very important market that they need to break into. they have had experiments from fresh to prime now, now with
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whole foods, they currently have five or six experiments going on a grocery. -- going on in grocery. that has always been so far the achilles heel for amazon. it is an important market to get into. it is an $800 billion market in the u.s. consumers areg buying every week, every day. if they don't break into the grocery market, it will be hard for them to sustain the boat. emily: jeff bezos talked about the threat of more scrutiny. he said all good companies should invite scrutiny which sounds nice. how big of a risk do you think antitrust scrutiny is on amazon? guru: anything with amazon starts to make news. right now, if you look at amazon, they are investing a lot in third-party businesses. which puts lesser of the monopolistic view -- it is becoming a marketplace much like ebay.
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more than 50% of their revenue on amazon is coming from third-party businesses. they are moving into a direction where it does not look too much monopolistic. it is looking more like a marketplace. marketplaces are free. they are free for competition. emily: you say walmart's journey to change its dna will take 10 years. in 10 years, how is the e-commerce landscape going to be different? guru: it is going to be a fierce battle. it is going one way, and going not, which prices will go down. availability will become very, very good. two our deliveries -- hour deliveries will become one hour deliveries. the selection will be much better. you are going to find a lot of -- anything you're looking for, and the substitute very easily. the deliveries will be much faster. the battlefront and the bar will
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be much higher not just for walmart, but for any company, any retailer to succeed. they have to succeed on the e-commerce battlefront. it is not an option. it is a requirement to survive in the future of retail to be successful in e-commerce. emily: if you could pick one, amazon or walmart in 10 years, which would you pick? guru: to me, right now, i would bet on amazon. given they have the dna. any company through -- company going through a dna change, they have to work at it. emily: thank you so much, as always, for joining us. jay kahn joins the show to talk about investment opportunities in tech including why he thinks there is room for growth in the cloud. this is bloomberg. ♪
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emily: as i mentioned earlier, softbank's vision fund is making an investment in gm's cruise automation and will own 20% of the company. the move highlights the deals in investments we have seen that are changing the landscape for anyone that manages money in the tech sector. here to discuss the impact of active investing and their outlook for technology, we are joined by jay kahn. let's take a step back and talk about how we have seen volatility in the step -- in the market over the last six months or so. how has that impacted your investment strategy? jay: it has created more opportunities. when we started the fund, 22% of equity assets in the united states were in active field goals -- in passive vehicles. that number is north of 38%. as more and more dollars have flown out of active management and into passive management, the market has become less efficient.
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emily: humans left involved, -- less involved, machines more involved. jay: machines do a great job by price and securities based on trailing metrics. trailing pe, trailing free cash flow, price momentum, they do a very core job of predicting the future. in a verdict like tech, machines struggle on predicting, is uber going to do cymer 88? or how is air be a be going to affect -- air bnb going to affect that? those are questions that will require research. as more and more dollars flow, into passive vehicles, the market by definition is becoming less efficiently priced for the future. emily: it's interesting you mentioned over. -- uber. softbank is making this big investment in cruise, as well as uber. why? jay: at the end of the day, softbank wants to be involved in as many facets of that value chain as possible. over a long period of time, we
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think these players consolidate. emily: how so? who becomes part of what? jay: we have seen consolidation overseas. ed and uber has joined forces in china. and in russia, uber and another company have joined forces. we think there will be continued consolidation across the value chain. it is unclear whether auto-parts suppliers are consolidating with autonomous driving purveyors as well. at the end of the day, we are moving from people ownership to vehicle as a service. these vehicles managed by one entity conglomerate, service parts, repair will all be done , by the large. emily: 50% of your portfolio is focus on asia. why? jay: asia is one of the most attractive areas to invest in for a number of reasons. it is highly inefficient. there are less institutional managers over there. it is also the area over the next 20-30 years where we will
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likely see the most growth. we have seen multi-billion-dollar assets coming out of china and the internet space. those trends will play out as well. if you think about the internet's evolution in asian -- in asia relative to the u.s., we are 5-10 years behind in terms of smartphone penetration, in terms of software penetration. some of these major markets. the next big exits into the public market are more likely to come from china, korea, south -- japan. emily: you are in some asian competitors to u.s. companies like payment competitors stripe and square. jay: yes. one of our favorite ideas and -- in japan is something called gml payment. it is a hybrid square player and it dominates the payment landscape in japan. they don't compete in north america. they have taken various elements of the business models of their north american competitors and they have applied that to japanese markets which is hard to penetrate for u.s. players. emily: you have a huge position in wayfarer.
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it has been controversial. since wayfarer has not been doing well. jay: it was not doing so well from a soft market perspective. -- stock market perspective. it is close to a 52-week high. if we step back and we think about the categories penetrating online, home goods is the least penetrated category online. about 12% of home goods is on the internet today versus apparel which is 28%. north of 35%. most folks think amazon is going to dominate every category on the internet. we have seen certain consumer discretionary categories. they have been challenging for amazon. one of them has been furniture. wayfarer is growing 46% year-over-year. the offline market is growing 1.5%. wayfarer is growing 30. it is growing nearly 30 as the online market. one of the reasons they are growing faster than amazon is duration -- curation. and you shop for furniture, the
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brand does not matter. amazon is great if you know what you want. if you know you need that five ounce bottle of clorox to refill from last week, amazon is the best place to find it in terms of price and speed of delivery. if you don't know what you want, amazon is a tough place to shop. in the home goods category, when designing a room, people like to move things around. they like to do 3-d visit relation. they like to swap out color palettes. downstream delivery is important. amazon primarily has a drop ship model. wayfarer has built their own delivery network and if you can imagine trying to receive a large couch to your walk-up house or apartment in a major city, it's important to know when that will arrive. a lot of these things, wayfarer solved in a big way. amazon is struggling in this category. emily: does that make you less optimistic about amazon? jay: we still are large shareholders in amazon. we think amazon has a massive opportunity. if you think about the penetration of consumer goods online, it is very early. amazon has been around 20 years.
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10% of the world's goods are sold online. we expect that to 30% over time. we think amazon has an advantage. emily: what about the other big tech names, facebook top of mind, given all the controversy over the last few weeks. jay: the irony of government regulation is that it makes the largest players even stronger. smaller players financially cannot compete when it comes to making sure that they are up to regulatory standards. we have seen reports out of europe that those -- both facebook and google have been capturing a disproportionate amount of ad dollars as a result of the new regulatory things put in place by the european regime. we are bulls on facebook, it is north of a $500 billion market cap. we invested in ipo. it is not as big of a position as it was in the past. we still like the opportunity going forward. emily: does slowing growth concerning?
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messenger.acebook but facebook itself, you are not seeing the same growth that we have seen. jay: that's true. you are not seeing it from a user perspective. you're still seeing incredible growth. facebook in the united states is still growing. north of 40% year-over-year. for that, as an investor, we are paying less than 15 times. we always hear pundits arguing that tech is expensive and there is little off site. we sit here and say tech is one of the cheapest sectors in the market. if you think about tech relative to cpg, you have these consumer product companies selling you a can of sodium for six dollars. not growing, with declining margins. emily: give me one controversial stock that you are not excited about? jay: grubhub. we have wrongly not been involved in grubhub since ipo. we invested in all the delivery players overseas.
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we miss grubhub, frankly we thought in the united states it would be difficult given the spread out suburban communities for grubhub to be successful. they have done a great job from an execution perspective. i am still not that excited about grubhub long-term. you look at uber eads, we own uber. they are doing a $6 billion run so far. they have got all this capital. we expect over a long period of time that uber will run over grubhub. emily: jay kahn, as always, thank you. coming up, autodesk is taking chat bot to a whole new level. how the company is pumping ai tech into its virtual assistant, next. this is bloomberg. ♪
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emily: a new study says facebook is losing it's cool with american teenagers. three years ago, it was the dominant social network with 71% visiting the site. now, only 51% of american teens are using facebook. among the sites that are more popular, youtube, snapchat, and instagram which is owned by facebook. autodesk makes software for the construction architecture design and manufacturing industries and has unveiled a new version of its virtual assistant called ava. ava combines things to recognize face to face human signals from customers going beyond the capabilities of traditional bots. she will tell users if they turn their camera on, she will be able to see them. here to talk about the technology, rachel, director of machine assistance at autodesk. what can ava do from a consumer perspective? how will this serve me?
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rachel: let me take you back to where we started with ava. we launched ava in february of 2017. at the time, we partnered with ibm and she was strictly a tech-based customer support agent. then as we evolved a vote, we partnered with soul machine, that is a new zealand tech company that essentially is working on studying human consciousness through ai. they brought a better life through the development of a digital avatar. this digital avatar for consumers can voice and video chat with our customers and recognize and respond to emotional cues. emily: obviously, we know this is potentially very transformative. in the short-term, how transformative will this technology be? how fast will it be implemented? rachael: we are working still in the pilot phase. it is very much emerging technology right now. in terms of transformation, i
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really think without those added visual cues and the inflection in tone and those other signals in our communication that are not textbased, you really miss a lot in the engagement. insofar as transforming the customer experience, i think it will be very transformative. as an example, if i text my sister with, i'm fine, she does not know if i am saying i am fine, or i'm fine. without that inflection in my tone, or those facial expressions to round out the entire experience, you are really missing part of the engagement and opening yourself up to misinterpretation. i really think this emotional intelligence will be something that bridges the gap in a lot of things we are seeing with artificial intelligence. emily: apple has siri, microsoft has cortana, amazon has alexa, why are all of these assistants
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women? how do you make that decision? rachel: i really think this technology is at the forefront. it is innovative, revolutionary. i don't understand why it should not be a woman. it is the next new innovative thing. but, research shows that women are seen as more collaborative. for autodesk, as we are creating our persona, we were really targeting a persona that would exemplify to our customers that we are tried to work together to -- trying to work together to solve their problems and get them on track and a female does that. emily: google came out with a feature that some felt was almost too human. there was concern that these ai's will not be identifying themselves as ai's in the future. should they? rachael: autodesk is doing everything we can to be transparent with our customers. we believe we should. ava actually will come right out in the beginning to say hello, i am autodesk virtual agent. then she constantly reiterates and reminds him, would you like
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-- reminds them, would you like me to get you to a human? i am a robot, i'm artificial intelligence. we are being very transparent with our customers. emily: what are you hearing from customers? in terms of the good and the bad. what are you learning from the feedback you are getting? rachael: we launched our version of the full machine ava with voice and video. feedback has been positive. we are hearing feedback around her being approachable, being engaging, and really initiating natural language processing. when you add that human element and you add the sophisticated virtual agent and a solution, you are really increasing your customer expectations to have a more humanlike engagement. which is more natural to them. we are encouraging them to speak to us the way they would normally, rather than to speak to us the way autodesk might want to hear it. emily: director of machine assistance at autodesk on ava, the next frontier. potentially in customer service. thank you. that does it for this edition of "bloomberg technology." from san francisco, i'm emily
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chang. this is bloomberg. ♪
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