tv Best of Bloomberg Technology Bloomberg March 2, 2019 11:00am-12:00pm EST
is in hot water once again with the fec. plus, 5g was a hot topic, but the uncertain future of huawei continues to overshadow the industry. and privacy practice, california is not waiting on the federal government to regulate big tech. why its proposal has companies like facebook fighting back. tesla mystery solved, elon musk is launching a new model three at a lower base price of $35,000. the news first broke after tesla ceo elon musk teased some mysterious tesla's news earlier this week, tweeting thursday 2 p.m. california, some tesla news. to discuss, we have got venture partners in minneapolis and keith in detroit. >> going with a lower-priced model three gives elon the opportunity to meet the very ambitious targets. they are planning to produce 400,000 model threes, that is a lot. and you can't sell them all at over $50,000. having a lower price should bring in new customers, bring in value customers.
the average price of a car in the united states is $37,000. this makes it a joe average kind of tesla for the first time. emily: hasn't tesla promised the price would eventually come down to $35,000? >> yeah, this is the original promise back from two years ago. in some sense, this is not news, but in other respects, it is the biggest news since the model three itself was announced. the simple math was that many felt that for this car to be produced profitably at $35,000 was impossible. that is what is so important. $35,000 does not sound that significant, but compare that to the rest of the car industry.
the few that do have ev's are typically at 70,000 plus. you can start to quickly see what teslas 80% market share they had in the u.s. on electric vehicles can maintain that kind of share, at least in the near term. emily: rights, tesla as you mentioned, already way ahead in the electric car market heard -- car market. tesla shares fall as we wait for them to announce will initially be a lower cost base price for the model three. keith, why did it take these two years to get here? >> it is typical of automakers. i know tesla is not a typical automaker, but usually you start with a higher price models because that gives you the biggest profit, the payback. then you move down the price ladder and start putting out lower-priced models and go for volume. you need to get a critical mass going. he has achieved that, and now has ambitious production targets. to sell those cars, he needs to
really have a lower-priced model. emily: how many more cars do think tesla will be able to sell at this price? how does this change your model? >> right now, we are conservative relative to their expectations. we probably need to rethink what our estimate will be. the simple takeaway is this your if you look at the broader market, there are 80 million vehicles sold, last year, 1% were electric. in the future, there is no question that 100% of vehicles, that might be 10 years or 30 years from now, but that is ultimately where we are going. what they can sell and what it means for the models is that this could be a significantly bigger company because of the price. emily: meantime, earlier we covered the news that the fec has asked a judge to hold musk in contempt for his tweet surround production numbers. is a 500,000 or 400,000, and did
he tweaked too soon -- tweet too soon? could these legal issues in peter tesla's progress? >> they could impede elon's progress, that's for sure. they put out a tweet saying they were at a 500,000 rate, where it was actually 400,000. he continues to tweet unfettered and that is the issue the fec has. emily: gene, you have choice words about the latest tweet. how concerned are you that these issues will continue to affect his leadership and possibly the company? >> concerned. and i want to make it clear that i am a believer in the tesla and elon musk story. nonetheless, i was at one point hopeful he could change.
unfortunately, he is not going to change and will continue to do reckless things. i just hope that this recklessness does not impact the business, because the company has a wonderful mission and they are in a great place to change the world. emily: the former ceo of pepsi is now the newest member of amazon's board. they will also serve on the board's audit committee according to a regulatory filing. she becomes the fifth woman on the e-commerce giants 11 person board. faster, they promised to increase the diversity on their board. she served as the ceo of pepsi from 2006 until 2018. still ahead, michael cohen accuses trump of criminal conduct in office in a hotly contested house hearing. what we heard about the hacked national -- democratic units. huawei pokes fun at u.s.
emily: at&t has beat back the trump administration's attempts to roll back their merger. they showed the lower court made a mistake when they rejected the antitrust argument. the next merger decision is the t-mobile sprint deal. in washington, all eyes were on president trump's longtime former personal attorney and fixer michael cohen. the six hour affair had plenty of heated exchanges as he laid out a list of damming allegations against the president, including a bombshell about the 2016 hacked democratic national committee units. >> a lot of people have asked me
about whether mr. trump knew about the release of the hacked documents, national committee emails ahead of time, and the answer is yes. emily: kelly is our executive editor who covers these investigations. we spoke with her on wednesday. >> according to him, roger stone called the office and trumps assistant put them on speakerphone. roger stone then said he had talked to julian assange of wikileaks and this dump is coming. i note here the julian assange has said he never spoke to roger stone. once again, we are caught up in a what could be the truth here? i will point out it is often the truth there is a go-between. whether someone else who represents assange remains a question and if somebody is even telling the truth, if indeed that is what he said. roger stone himself is operating under a gag order by a judge to
we are not hearing him him. but it is one of several tantalizing things coming out of this testimony. emily: let's talk about the other tantalizing things. much of it reiterated his opening testimony, but what are the new and most significant revelations? >> i have to be honest, for prosecutors, there is nothing revelatory here. but for the rest of the public, it is astounding to see a sitting president attacked and treated like this in congress, quite unusual. not since bill clinton's impeachment hearings have we seen anything like this. the attacks on his personality and character are stunning. in terms of the legal issues, cohen cannot speak for prosecutors but can give us a glimpse of the threads and open inquiry. we can see potential, and that is all it is at the moment, but quite interesting. there are several, one involving the trump organization itself. according to coding, others there were involved in several questionable activities along
with trump. he says that trump was the one who dictated the terms of the payments to stormy daniels and then repaying michael cohen. and then weiselberg took him aside and said we will do this over an amount of time and look like a retainer agreement for legal work. that would be a books and records issue for this corporation, so that is one thing. separately, he talked about how trump may have inflated values for certain purposes of assets and under cap them for other purposes. so did he misrepresents the value of assets, for example, when trying to attain a clothes -- bank loans? those things have been brought forth and give us a tantalizing tidbit of what prosecutors could be looking at. those are a couple examples. emily: the president is busy in hanoi, so it is unclear how much
he could watch. he retweeted an old tweet saying that michael cohen was one of many lowers -- lawyers. he was just a disbarred for lying and fraud and did bad things unrelated to trump, lying to reduce prison time. he was interrogated over and over pointing out that he did indeed lied to congress, yes he is going to jail for lying to congress. that said, what are the tangible legal issues that might arise out of this testimony, as it pertains to possible collusion and possible obstruction of justice? >> on the collusion front, there was not much new. michael cohen was asked point blank and did suggest that he knew about the information coming from wikileaks but did not go to the point of saying he directed it or was involved. the other example was the infamous trump tower meeting
involving his son and a russian lawyer. in that case, cohen is speaking from what he expects to be true, but nobody knows. he says that don jr. did nothing without his father's permission and that he certainly would have consulted. he does is far say he recollected a conversation that, but that is not proof. to the core issue about collusion and i don't think we got a lot new, except perhaps detail, color, and a few more questions about whether someone was involved in communicating with wikileaks. emily: that was a bloomberg's executive editor winnie o'kelly. meanwhile, attempts to ban huawei's five g technology is driving interest for the other telecoms. that is what we heard and barcelona this week.
take a listen. >> we are watching closely and observing. it is for government to decide. we will be there for our customers when they need us. we are getting more interest and there are concerns. there are also some uncertainties and we just watched closely. emily: this, as huawei unveils a new and expensive phone. we caught up with bloomberg technology's mark gurman in a lead. >> they have two main parts their phone business, one is that they provide 5g and equipment for infrastructure and carriers around the world, or intend to. the other is that they make these phones. they have introduced this $2600 foldable phone. they are well received and their 5g technology is fairly
advanced. it gives technology a conundrum. what if consumers want to buy phones that government and others are not allowing them to sell? also, 5g. what happens when customers are asking for 5g? it feels like in terms of innovation and technology and the hardware space, as well as advancement in 5g and carrier networking, they have the carriers is not a so great position. emily: all of this negativity around huawei, is that impacting the handset business at all? >> right now, it does not appear to be. you see at&t and sprint discussing their plans, some saying they will be with 5g by the end of 2019. you will see sprint and at&t and others showing more progress in their 5g networking across 2020 and after. in the u.s., it does not appear
that huawei is impacting netowrk, but it is a different story outside of the u.s. >> some would recoil at the idea of $1000 for a new iphone model. a $2600 phone, who will be paying for this? >> what we have seen is that since apple announced the phone, we have seen prices skyrocket. a couple weeks ago, samsung announced their galaxy fold. price to $20 under the $2000 threshold. who is going to buy it? i don't think many people. that price is out of reach, but that is early adopter pricing.
this is what it costs to make, this is what they sell it for, this is why it needs to be so expensive. overall, i will think you will find many people paying for it, even a diehard tech fan like me. that is not something i would shell out that kind of money for. >> mark, what did we learn for the new thing on wearables? >> wearable technology has been slowing. the biggest wearable news we didn't get was from samsung a week ago alongside the galaxy fold. but we are seeing a lot of the smart watchmakers, whether that is fitbit or others reporting an uptick in smart watch, people enjoying smart watches and buying up the smart watches. apple released their latest smart watch in september, apple
watch series for. -- series 4. emily: you have a report that apple is testing a feature for the apple watch. how will this work? >> before apple launches a new health or fitness feature on the apple watch, or any other device, they put it through paces on outside people they bring into these labs they have outside of the cupertino campus. that have multiple fitness labs, one for swimming, they have special chambers that can simulate a very hot weather conditions, upwards of 100 degrees. weather conditions that are cold, bicycles, and now they are doing the same for sleep tracking. emily: that was bloomberg's mark gurman. staying with 5g, qualcomm out with a new chip. why the company president says 5g will become critical infrastructure.
emily: qualcomm's new chip will connect to six the generation high-speed services that will bring faster downloads and speedy connection. i sat down with the president for an exclusive interview about the company's latest moves. take a listen. >> one of the big announcements we made, we are very proud of it, is the qualcomm 5g power save technology. that is a technology that is allowing the first generation 4g phones to allow you to have a better battery life. we had a very mature smartphone base, users will not settle for any less. that is the bar for the new 5g flagships and we are happy with a number of what we have.
emily: is it really the carriers that decide how and when 5g happens? and are they on board? >> that is a great question. sometimes, we forget about 4g. when we were at this time launching 4g technology over a decade ago, we had two operators and four devices. look at where we are now, 20 operators and 40 devices. emily: talk to me about this partnership with samsung that you have engaged in. they have now announced a flip phone. will a new get it like that help accelerate this? >> i feel there is an enormous potential for 5g to change the form factor of devices. we are proud of this partnership with samsung and how they have been great partner pioneers. we have also seen a number of different devices announced and we see a potential for form factors to change.
the most important thing is that if you change your experience with 5g, you will want a different type of device and screen size and resolution. the apps are going to become way more powerful, which will likely have more powerful hardware, so yes. emily: so it is not be formfactor that accelerates 5g, it is 5g that changes forms? >> yes. emily: what changes will we see? >> bigger screens are here to stay. you see the opportunity for larger screens. it will also see specialized devices specialized for capable gaming, because 5g will allow mainstream gaming on 5g devices. also, you will see devices that are going to converge between productivity.
over time, we expect to see virtual or augmented reality devices, as well as a companion to your home that will be used in 5g technology, and we hope them to look like eyeglasses. emily: other companies coming up with 5g, xiaomi, oneplus. how worried are you? >> not worried, all of them announced at the show, with the exception of one, are using qualcomm technology. emily: what about huawei? >> we have always been competing, but there also a customer of qualcomm. when we think about china in general, i like to put it in that context, china's mobile ecosystem sees 5g as an opportunity to expand, not only in china, but globally. we will see xiaomi, oneplus, vivo embracing 5g and even going to arab markets. we think the china business will continue to expand and 5g will be a great opportunity.
emily: huawei is facing bands around the world -- bans around the world. how closely are you following? >> our infrastructure play is in a different area. we are not directly related, but we are a partner on the infrastructure. it is a sign that, if anything, a sign that 5g is way beyond mobile. it will become a critical infrastructure because it will power everything around us. emily: that was my interview with qualcomm's present. coming up, california takes the lead when it comes to protecting user data. what the state has planned to let you take on a tech -- big tech. we are live streaming on twitter
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emily: welcome back to "the best of bloomberg technology." the tech world is waiting to see what congress will propose when it comes to protect users data privacy. california is not. the measure would allow consumers to sue companies. it could signal an onslaught of class-action lawsuits, and when the tech industry opposes. >> in 2018, the ccpa past unanimously.
they set aside 2019 for details on how it would be enforced. one of the big proposals we saw this week was the right to private action. that would permit consumers in california who feel their data has been distributed without consent or in breach of their agreement, to sue for monetary damages companies like facebook and google. there are a number of other proposals like the right for consumers to find out how much their data is worth, and to gain access to that data and know how it is being distributed down the line. emily: does common sense support some of these stronger potential additions to the law?
>> yes, common sense is supportive. we expect also to see actions by industry to weaken it. emily: what are the tech companies lobbying for? they funded the law's opposition. >> in a committee hearing last week, the industry said it would be a bonanza against the industry and there would be so much litigation it would be tough to come out from underneath. that is a big no-no for the industry.
there are some details like the right to have loyalty programs with consumers, they want to ensure to protect but there are some concerns they could be discriminatory. details in the weeks about exactly who was being covered, which businesses of what size. emily: if the law passes as written, what would change for me as a user? >> the california consumer privacy act? emily: right. >> senate bill 561, you as a california resident would be able to take a company to court if they sell your data when you have told them not to, or if they are not transparent about what they have done with your data or if they do not let you delete it. emily: couldn't this law be overruled by federal privacy legislation? >> that is a concern. if congress passes legislation that would preempt what is happening in california, there
could be a scenario where everything to the lobbyist are fighting for in sacramento could be null and void. emily: speaking of big tech, u.s. tech companies have pushed to gain a global footprint for years and one of the only companies that was successful is apple. they are one of a handful of companies to generate significantly more money overseas than in the united states. while companies like google or amazon have struggled to grow internationally, relying on the u.s. is enough for now. shira: the internet companies like facebook and alphabet have a lot of users outside the united states, but a significant share of their revenue continues to be generated inside the united states. the issue is that if you look at companies like facebook and google, they are generating most of their money from advertising.
microsoft is generating money from selling technology to businesses. in those markets, the u.s. is by far the largest market in the world. in e-commerce, china is number one in the u.s. is a distant number two. china has not in a hospitable e-commerce market for u.s. technology companies. emily: why is amazon so reliant on sales in the u.s.? is that a danger? shira: to my surprise, amazon has gotten more reliant on the u.s. in the last five years rather than less, and part of that is because of their success with all kinds of customers. u.s. or north america e-commerce sales are growing faster than
e-commerce sales outside of the u.s. for the last couple of years. that is 69% of amazon's total sales last year, from the united states. emily: what about all the money they have been pouring into india and international markets? shira: that is a lot about the future. those are growth markets but they are relatively small. emily: apple has been doing well, despite the concerns about sales in china. will apple's future international growth be as strong? shira: it is hard to see that. the issue for apple is the biggest smartphone growth markets are india and vietnam, where apple does not look like it is in a good position, their phones are relatively high, and they have not shown a willingness to tell those products for a particular country's needs, so that puts
them at a disadvantage in places like india. emily: when it comes to google and facebook, do you perceive their reliance on the united states will ever change? shira: i don't think so, not in the short term. the issue is the biggest pool of advertising is in the united states. that market is growing more slowly and some of the explosive growth markets like china, but the u.s. is still by far the largest. for the future, if and when you start seeing large advertising market in the developing world getting bigger as a share of global advertising, but china is kind of the big hole.
emily: they may never get access. shira: they may never get access and they may not be successful. emily: adding a fifth woman to amazon's board, they have answered some of the pushback. what do you make of the choice? shira: in addition to the board diversity issue, she is a really great addition to that board given her long experience at pepsico. she was a consumer product ceo and knows the challenges of being a traditional company trying to pivot to the e-commerce world. emily: what do you see as the international financial picture of these u.s. tech companies in the next five years? how much changes? shira: it is hard to see it changing materially in the next
five years. amazon might be the exception. we could start seeing those outside the u.s. me markets like india take off. if you are depending on advertising or business technology sales, the u.s. is still a huge sponge of revenues for those companies to take advantage of and i do not see that changing, even if the majority of users for facebook and google are not in the united states. emily: still ahead, the alibaba cofounder and executive vice chair joins us for an exclusive and wide ranging interview. why he is optimistic about a trade deal between the u.s. and china. listen on bloomberg radio and in the u.s. on sirius xm. this is bloomberg. ♪
trade deal with china, but joe tsai is optimistic a deal will happen. we caught up with him for an exclusive interview. joe: there are a lot of issues industry deal, but the important thing is that the tariffs will stop. that will help a lot of businesses on both sides of the ocean. the chinese manufacturers will get a reprieve that will help them continue to export. if it is going to be good for the businesses operating on alibaba's platform. emily: what if that doesn't happen? joe: i think the dialogue between the united states and china is going to be a continuous dialogue. trade is not the only issue. there are issues on intellectual property, on industrial policy, but i expect that will be a continuous conversation.
the tariffs itself is really sort of an enforcement mechanism. if you look at alibaba's business, our business is driven by domestic consumption and corporate digitization. even though we have some parts of our business tied to exports, most of the business within alibaba is driven by domestic consumption with 300 million consumers, middle-class consumers that are buying things. they are going to demand more products. i think over time, even if there is no trade deal now, the trade deficit the between china and the united states will structurally correct itself. we have an economy that is, domestic consumption has become a bigger part of the economy. the chinese government is talking about over the next 15 years importing $30 trillion of
goods and $10 trillion of services. that is a very important thing as american service companies in health care and banking can move to china and set up a foothold, and serve the chinese population. emily: what does it all mean for alibaba, whether or not a deal happens? joe: we operate for the long-term, so we are hopeful that a deal will happen. obviously, the markets have responded to that. if you look at our core businesses, most of it is tied to domestic consumption so even if it doesn't happen, we will
continue to chug along and focus on our strategy. our strategy in new retail is focused on digitizing the domestic retail sector, making retail more efficient. that is all driven by domestic consumption. emily: how optimistic are you based on what you have seeing, that a deal will be reached? joe: i am always glass half-full kind of guy. we are cautiously optimistic based on the developments. the two delegations from the countries have met several times, and president trump has said there is going to be a meeting between him and president xi at a place and time to be determined. i think these are positive developments and the signaling is pretty good. emily: we are here at the sports innovation summit at the stanford school of business, and you are the co-owner of three sports teams. what attracted you to these? joe: i love sports. i played sports throughout high school and college, and the values of what you learn on the field can carry you far in life. i encourage all kids, including my own kids, to play sports. emily: it is also a business opportunity.
how much revenue are these teams driving? joe: nba teams, it is a good proposition from a business standpoint. the nba is a very substantial media company and it is well-managed. the structure is set up so there is a good balance between the owners and the players, and among the owners. i was attracted to the nba because of the international growth opportunities. when you look at markets like china what 300 million fans, the potential increase in the media rights in those markets, not just china but also india, mexico, indonesia, and the
philippines. those opportunities will be tremendous. emily: the nba just announced a branded league in africa. why not asia? in china, there are a lot of basketball fans. joe: you will have to ask adam silver about the geographic location. i think the africa league will help the nba to develop players in africa. obviously, they have decided there will also be a local fan base in africa. there is a lot of developmental aspect to that league. i think it is very exciting. having leagues in other parts of
the world is more challenging because in europe and asia, they already have local leagues that have been formed, playing games and all that. that is one of the reasons why nba pick africa. emily: there is a mixed record for sports diplomacy dating back to the 1970's and the ping-pong games with president nixon visiting beijing. good sports improve the tensions between the u.s. and china? joe: i think absolutely. when you see teams competing on the field, and when they get off the field or the court they become friends, these are authentic stories between people. the people to people exchange, this sort of true friendship that is genuine, authentic, will help the two countries understand each other better. emily: that was alibaba cofounder and executive vice chair joseph tsai.
emily: home exercise start up pelaton is choosing goldman sachs and j.p. morgan chase to start its ipo. pelaton sells exercise bikes and treadmills with tablets attached. steve wozniak says he lost respect mark zuckerberg when he saw how he testified. take a listen. steve: different technologies are ongoing life things.
i urge a company to hold off as long as they can from an ipo because then you are no longer run a your own company, the shareholders are, and your positions are different. i am not looking at any specific technologies or companies that i would not think about in terms of how do we get to an ipo eventually. i only think of how we make a product and will it do good for society. yousef: you have said in the past you believe bitcoin will be the world's single currency. are you still a believer in that? is that still a workable model? steve: we have seen massive value destruction. we have seen massive value creation. psychology will often drive, like stock market tips, get out now. the psychology factor is kind of
a fear thing and there was this idea, bitcoin may go up to $40,000 and then go down to $20,000. i had a lot of bitcoin but i never was investor. i just wanted to experiment how to buy things around the world. when it went up high i said, wait a minute, i do not want to be one of those people. i do not want to be one of those people watching the price of bitcoin so i sold out. wherever it is now, it is way over where i bought, and i still experiment with it. yousef: we have seen tech leadership get into quite a bit of trouble online, thinking of mark zuckerberg and jack dorsey. when you see these issues -- and you have spoken clearly about this in the past -- what is the message you want to send when you see these scandals?
steve: i think jack dorsey is doing a lot more than mark zuckerberg to correct it. i lost a lot of respect for mark zuckerberg watching him speak. not one penny of facebook's income, i do not trust that. there is a company in the social web called foursquare out of new york. you rate different restaurants and places you go, and they keep a lot of data. they have been offered millions of dollars for the data on the users but they have turned it down because it is unethical, so you can make a choice and draw the line at a good place. i quit my facebook account. i have really never used twitter.
yousef: is it time for the government to get more involved? there are a few legislative efforts but does that need to be taken more serious? steve: probably. regulation is good. it says companies will not do certain bad things, or a country, government will not do bad things. we have a constitution and the bill of rights, the government shall not pass a law, congress shall not pass the law, the government will not do certain bad things. that kind of regulation we need some of when things are getting bad, and the united states is way behind europe recognizing issues of data privacy. yousef: 5g and many other technologies in focus. what are you most excited about? steve: i subtract a lot of the stuff that was going on in the mobile world with cell phones, every day i wanted to look, what is new coming out? i bought the latest products, many of them. i have lost interest. i am more interested in the televisions coming out.
i do not know that i will benefit from 5g or that i feel the need for an increase on cellular bandwidth right now, so that will not impact me much. things i am interested in, electric cars, where they are going to come their benefits and problems are, and infrastructure for them. i am sort of at a low point, but i am waiting for apple to come back in the game with something really new and striking. yousef: is there a sense that apple is falling behind in the innovation game? steve: apple has been the leader for facial id and easy payment with the phone, they were the leader and everyone else had to follow. they are not the leader for
things like the folding phone, and that worries me because i do want a folding phone. it is a new technology that catches my attention. apple always has surprises, working on a lot of things in the background. they just got so successful with the iphone but that was their whole business for a while. now they are branching out and a lot of their services are good. i am looking for apple tv to expand. right now, i prefer my roku. emily: that does it for this edition of "the best of bloomberg technology." next week, i will come to you from new york bringing you some of the biggest names based in silicon valley. we are live streaming on twitter. check us out, and be sure to follow our global news network on twitter. ♪
>> time now for bloomberg best, the stories that shaped the week in business around the world. trade tensions on pause as the u.s. delayed tariffs on china. >> the tension of the deadline was huge. >> i don't believe it will solve all the problems. >> theresa may opens the door for sending the brexit deadline. >> we have seen major policy reversals. >> the trump-kim summit collapses with no deal. >> the north koreans are saying the u.s. could have missed an oppty