tv Bloomberg Technology Bloomberg March 20, 2019 5:00pm-6:00pm EDT
emily: i am emily chang in san francisco, and this is bloomberg technology. coming up, europe slams google with another fine, totaling $1.7 billion. final do and possibly you penalty, but regulators are scrutinizing other tech giants like apple, amazon, and facebook. apple continuing its hardware revamp. the company unveiled a second-generation air pod, which provides hands-free access to siri and 50% more talk time.
and a service born in the wake of a bumpy rollout of healthcare.gov. it is stepping up efforts to give americans better access to government services. first, our top story. google has been fined $1.7 billion by the european union in the latest antitrust judgment. trio ofe last of a probes that have led to a total of $9.3 billion in penalties for google. the search giant is making changes in how it displays ads to comply with an order. the chief hinted at less risk of new fines in the future. look at the numbers now and the intentions of google in the android decision, this is all to say we do not have a noncompliance issue as it is now. we will of course keep following is positivethink it
that google takes steps that allow for more consumer choice. emily: turning to the discussion in washington, richard staple, ceo at a shopping search engine which operates in 22 countries and competes with google in europe, and garrett, who covers google for us. we have a third and quite a large fine. however, when it comes to google's balance sheet, this is baked in. investors are not concerned about even these finds that seem to cost a ton of money. as you said, it looks like the europe aftere from 10 years of what google euphemistically called discussions with e.u. looks to be closing for them. i do not think it means they will never be looked at again by european competition authorities, but there are bigger fish to fry -- amazon, apple, facebook. what the last 10 years have shown is that european
big techs can go after companies. they can extract large fines. they can get support for it politically back home without getting major pushback from consumers in europe. emily: richard, you have applauded the e.u. decision. what does google changing its practices in this area mean for your business? richard: thank you for having me. what i would say is that this fine today is something we welcomed and consumers have welcomed, but it is not going to change a lot in the marketplace. google is being given basically a cease-and-desist order, which basically says "stop doing what you have been doing," and they stopped doing it in 2016. in these two-sided markets, basically the market is tipped in google's favor, and they are going to come out of this and go, we just paid a tax for taking over another market. we asked for the commissioner to go further and force google to put right the wrongs it has done
to this market, just like it has done in shopping and in android. emily: bubble the wrongs mean? to your point -- what would righting the wrongs mean? google control this ad market 2016.6 -- from 1006 to richard: it has all the data. we cannot compete because they have this entrenchment with and the only way that can happen is if google is forced to give up some market share, which it looks like the commissioner is unwilling or unable to do. what have google's responses to this then? they see this as a response to a few complaints, as they say it. inrit: google response as any situation, to say they wo
becausen they have the best business, the best algorithms to provide these kinds of ads and products to the people who pay for them. but it is true. 70% they were in control of of the market, that gives them the power to continue and grab more and more of it. and it is difficult to see exactly how that would be changed. i think at this point google and its investors are pretty confident that they are not going to be kicked completely out of these markets. the fines, they are willing to pay them. it will continue doing the business. emily: if google owns 70% of changes,arket, with how did the percentage or market share change? richard: i do not see it changing much at all. i think they will continue in this market to control it and have at least 70%. nothing has really changed in their behavior since 2016, when they removed these exclusivity clauses. i think you have to look at the broader context and say this is a company that has lost its moral compass.
this is the third time it has been found guilty of anti-competition. it is a very big fine today, along with the other fines. google's perspective, it is just a tax to take over more markets. margarehte said it appears the e.u. is not worried about other compliance issues, but is likely going to train its scrutiny on amazon, apple, other big tech companies. what other possible actions are we watching for? gerrit: other companies have already paid large penalties when it comes to taxes. deciding thes companies have not exactly paid the taxes they are owing in the e.u., but when it comes to competition, we have seen some but not as large as the google fine. we know there is a probe into amazon. we talk all the time in the united states about amazon and antitrust, and its position in the marketplace, especially when
it comes to developing products to sell in their own marketplace and compete against the merchants who use amazon to foreign consumers. it is definitely a space to stay tuned and watch what the e.u. ends up doing. both so muchyou for weighing in. president trump said he will keep tariffs on china until he is sure beijing is complying with any trade deal, refuting speculation that the nations will agree to roll back duties as part of a lasting truce to their trade war. that runnts dent hopes the clock negotiations between the world's biggest economies could lead to them removing the roughly $360 billion in tariffs they have imposed on each other. but president trump said he remains hopeful about the talks. are getting we along with china very well. a friend she -- xi is of mine. we have our top representatives going this weekend to further the deal.
are taking in billions and billions of dollars right now in tariffs money. for a period of time, that will stay. coming up, apple continues to build anticipation ahead of its media event on march 25. it is revealing a new version of its air prods. we will bring you the details area -- details. if you like us, check us out on the radio. ♪
goldman sachs ceo will be a special guest at next week's event. joining us with more, mark gurman. i was hoping for opera, but i will take david solomon. mark, why is david solomon going to be at the apple event? mark: according to sources we spoke to, david solomon, ceo of goldman sachs, will be in attendance. he won't be on stage. the main reason is because apple and goldman have an upcoming partnership around a joint credit card that would be tied to apple pay. because of annual fees and credit card processing fees, this would generate additional revenue for apple, who are looking for additional revenue serviceshrough its business. this fits in very nicely with the rest of the services bundled they are going to talk about, with video streaming, on monday. thing, ais is a new joint credit card between goldman and apple. it deals like a different animal than a new entertainment bundle. is a different animal.
again, it contributes to the same bottom line as the video service would, the overall services revenue, the difference instructions they are trying to shoot for. reddit cards, you gain annual fees every month or every year for a credit card of this nature. it is to be seen what the actual selling point will be. there are lots of premium credit cards on the market already. i will be curious to watch and see who apple is partnering with on the reward side, whether there is some sort of travel integration, all sorts of features that chase and american express have currently. emily: you are here the third day in a row, talking about the third apple hardware upgrade in three days. tell us about the new air pod. mark: lucky me. the new air pods are orond-generation, or a 1.5 s, so to an air pod speak. these were meant to be released at the end of last year, but apple held them back because
they wanted to launch them simultaneously with the air power charger that is still not out. "siri" anday activate siri on the headphones. for talkbattery life time, three hours of talk time instead of two hours. this is important because people who have had air pods for over two and a half years now, the battery life is starting to wane. small headphones, small batteries. battery life decreases over time. now there will be a new pair for people to upgrade to. emily: air pods have been a sleeper hit, but at $159, how big a deal are they for apple's bottom line, and wearables in general? mark: apple is looking for products to replace the iphone, in order to combat the slowing sales we saw in china at the end of last year. but i started looking at it differently.
the are doubling down on iphone by coming up with recurring revenues from services and all of these products around the iphone. the member, the air pods are not a stand-alone product. for all intents and purposes, they are exclusive to the iphone. likewise with the apple watch. without an iphone, the apple watch is not a thing. the same will be able to be said that year for the apple augmented reality headset. that will also be linked. emily: mark gurman, we will see if you are back tomorrow. i will be disappointed if you are not. start looking for a scoop. stopping by. ford has announced it will spend $900 million and hire roughly 900 workers to build electric and self driving cars in michigan. it has had a shift of workers at the flat rock plant because of slow sales of the mustang and continental, but is adding workers to build next-generation vehicles. , our reporter in
detroit. what do we know about what ford is planning to build here? reporter: they are going to continue to build mustangs in this plant, but they are going to add new electrical vehicles. and they are no longer going to produce the autonomous vehicles they said they would build in this plant. it will be electric cars and 2023 onward.m they are separately building and autonomous assembly center somewhere in the detroit area in the next couple of years. that is another $50 million investment. cars that are already built and will update them with the software for the self driving technology. emily: production does not even start until 2023. talk about ford's position or lack thereof in the ev market versus other automakers. keith: they are chasing tesla, right? ford is spending $11 billion to develop a raft of electric
vehicles. the first will be coming next year. they say it is a mustang-inspired 300 mile crossover electric vehicle, a souped-up suv powered by a battery. that is going to be there first foray. they are trying to make electric ,ehicles as tesla has done rather than an eco-play. emily: right, overly practical. what does this say about ford's broader restructuring? keith: they are really trying to make a bet on the future with electric features and self driving vehicles. at this stage is distant. they still have to turn out the big suv's, the big pickup trucks that make their money and our financing their future. what happened to their plan to work in mexico? keith: they canceled a small car
plant in mexico a couple of years ago as trump was coming into office, but then they were going to build ev's in michigan. he moved that down to mexico. now they are going to build ev's in michigan after all. they have been going back on the electrical vehicle in mexico versus the united states. they are also taking a commercial van out of spain and are going to move that to mexico. they will have mexican production, but they are beefing up u.s. production as well. they: what you make of timing of this announcement with gm announcing in ohio, which president trump did not like. atth: it is not coincidental all. ford is trying to make a little hey. much of what they announced today, they have announced previously, just in a different package. the investment of about $900 million was previously announced. 900,obs, $900 -- the jobs,
were previously announced. the big news is that they will build electric vehicles instead of autonomous the theater -- autonomous vehicles, self driving cars. emily: keith known for us in detroit. naughton for us in detroit. the u.s. has had 30,000 power outages in the last 10 years. build argy is trying to better solution. check us out at twitter. ♪
ceo said it is never good when companies decide to not be straightforward about the math of their business, and these guys told us almost nothing you need to build a model. he further said lyft has not been forthcoming in metrics like separating the acquisition costs of drivers and passengers. meanwhile, lyft got its first buy rating. firefighters have extremist a petrochemical tank fire near houston, texas that blazed for almost five days. the fire began sunday when a leaking chemical tank ignited, sending a plume of smoke over the city. authorities have assured residents the air is not a threat to health, but the chemical blaze further underscores the need for clean energy solutions. joining us now to discuss is blame energy -- bloom energy's ceo. they allow the generation of clean energy. we had the fires in houston, the
fires in california. why is it taking so long for clean energy to catch on? problem ofa scale in alarge infrastructure place where electricity is becoming a human need more so than it was 100 years ago. think about the normal brick and mortar that did not depend so heavily on electricity. today, digital runs on electricity. the net electricity has to be reliable, resilient, clean, affordable, connected. .nergy is a multifaceted issue what we try to bring is not any one element of it, but a platform that can integrate all these five elements together. emily: explain what bloom energy does. you use natural gas to make electricity. gas ore use natural biogas. we have a bloom energy server. imagine a home depot store.
at the back of the store, you can put the same gas that comes to aur house -- it goes pipeline at very low pressure. it goes into our system. there is no fire. there is no combustion. you are using a proprietary electrochemical process using a fuel-cell. we convert the chemical to electrical energy without any fire, and that creates clean energy. linn energy was founded almost two decades ago. you did just go public. when it was founded, there were these great expectations about clean tech having its moment. cleantech still really has not had its moment, unless it is slowly happening now with tesla. why do you think that is? if you look at the first cell phone and how long it took for cell phones to become commonplace and mainstream -- it was about three or four decades.
if you look at where we are in the curve, i am confident of the idea becoming mainstream. businesses are more and more parts ofn distributed cleantech. 10 years from now, you will see a lot more adoption. emily: is the moment 10 years from now? k.r.: the moment is now and the momentum will pick up. we see the did money? linn energy still is not profitable. stock-basedur compensation, we have been net income positive the last two quarters we have reported. we are expecting that trend to be strong in the second half of this coming year. are very confident we will be financially sustainable and profitable as we go forward. emily: with pg&e and the california fires, pg -- pg&e is
filing for bankruptcy. there is a lack of confidence in the whole grid. what you think the fallout is going to be? k.r.: more and more companies are going to rely on micro grids. the way for you to think about a micro-grid is, should there be something wrong with the macro grid, you can isolate yourself and have this building have the electricity and all its needs taken care of using a microgrid. those will be bloom-like systems with other energy systems, storage, into a micro-grid. in the last few years, we have had more than 50 installations of micro grants for our customers. in fact, just now, we are going to announce today and tomorrow to different companies. is a headquarter in silicon valley, because they have lost power so often they are using a
micro-grid. emily: softbank, walmart, home depot -- as the grid changes, how do these problems with -- we just saw a big facebook server issue. how do those problems get sorted out? micro-grid will be significantly more reliable and more resilient. let me give you an example. we actually powered fish markets. there were two super typhoons and a 6.7 earthquake, and the epicenter was half a mile from where our energy servers work. we continue to operate through the super typhoon's and the earthquake, in spite of what happened. that is the reliability. emily: bloom energy ceo kr sridhar, thank you for stopping by. coming up, content on youtube has committed a minefield of
"bloomberg is technology." youtube needs to remove -- has been troubled to remove inappropriate content since 2005. one area is content or kids. kidfluencerscalled and box opening videos. lawmakers are asking regular readers to crack down on stuff aimed at children and to clean up the platform like removing children's videos from the premium ad program and made it even worse. joining me to discuss, mark bergen, and we have a managing
partner who covers the internet, anduding google, facebook apple. it doesn't take a genius to spend 10 seconds on youtube kids and see there are problems. what are the problems? mark: they have been dealing with more outlandish and dangerous videos. mosttream videos are the big stars. they are not doing anything wrong. youtube built a system where it is successful to be engaging, opening boxing videos are a perfect case. and get his un-boxing a video or if the company has not paid or it. children are very impressionable. youtube claims no one under 13 should be using its site. emily: that is just ingenuous. .- disingenuous if you can search for many
videos kids over 13 would not watch, and there is plenty of content. mark: the own boxing stars are homegrown -- un-boxing stars are homegrown. they are not disney or other companies building streaming services. them and wants to promote them. at the same time they are getting into regulatory issues. they have youtube kids, which is an app designed for children under 13. we have heard people talk about that. a lot of content is for toddlers, not eight to 12-year-olds. around 18 million active subscribers, which is 2 billion worldwide, something too small. historically, it is not big enough to keep sustaining. ofly: what percentage revenue comes from youtube kids who do or kids?s content -- youtube
>> we think it is somewhere and 10 $15 billion billion dollars in revenue, probably $550 million a year in business advertising alongside of these kids content products. a videoe are watching by this famous kid influencer. it was some of her videos you found to be problematic. mark: these are groups that have complained to the ftc. she is interesting. she goes to target, walmart, a clothing line. she is shopping. i was told if this were nickelodeon on children's broadcast, the ftc would say that is an ad and you can't have more than 12 minutes of advertising for every hour of programming. youtube said it is fine. target didn't pay for this. it is a new version of sponsored
contents. some groups that crosses a moral line and arguing for the ftc and congress to say it is a regulatory issue. emily: after you contacted youtube, they pulled down a video. mark: it wasn't from her main channel. --t video they said violates part of the issue in talking to the creators and people in the industry is it is not clear. the rules are changing, youtube re-drawing line in the sand. they are adjusting to strong policies. there is a sense that tens of thousands of creators -- it is hard to communicate. this is a benefit and downside of the business model is they have thousands of users and they can't tame them all. emily: traditional television has been regulated for years and youtube has avoided this. is there a serious threat, and could that sent the business who
-- good that didn't -- that -- >> there is a blurry line with what is native and what is sponsored. this world of influences we live in, they themselves are their brand. everything is native and everything is sponsored. so i think as these influencers build businesses on their brands, taking kylie jenner with kylie cosmetics to $800 million -- it is huge volume -- value in personal branding. we see more success and it will be more difficult to suffer -- separate what is native and what is sponsored. emily: the goal of advertising is you want the ad to look as native as possible. youtube to give a statement saying youtube content creators are responsible for making sure they comply with laws. does, we will take action.
it is blaming somebody else. how can they trust the content creators are going to abide by the rules? mark: the ftc did come down on musically, and app that was fined -- musically, an app that was fined. google is almost immune. it is a curse, and it is also their greatest strength. they have very few to no competitors now. that could be changing with apple jumping in and netflix, being more aggressive about kids content. emily: it is different though. will those platforms be a threat to youtube? >> i don't see netflix as a threat. when we talk about influencers, it is more on instagram side, whether it is snack couple content.- snackable
instagram is shorter, youtube is longer. that is more a threat, versus netflix which is professional. emily: i know you will continue reporting on this story. thank you so much. in theup, working crossroads. silicon valley and washington talking to the administrators of the u.s. digital service. the mission of the nonpartisan agency and how rising [indiscernible] good impact regulations. this is bloomberg. ♪
veterans disability claims and break down technological barriers for immigrants looking for green cards could we spoke with the administrator and started -- green cards. we spoke with the administrator and started talking about the bumpy history of the government and technology. >> it is crucial. you don't always see people bringing what we call user centered design. it is thinking about the veteran, dr., student and putting them at the center of the issue. specifications and no software, you don't end up with a good experience. emily: you worked at google where things work at light speed. why move to where things are slow? >> first it is the mission and the impact. the meaningfulness of the ability to see the impact you can have is gratifying.
the other thing is technology, you can cherry pick. you conserve one market. government needs to serve everyone. whenever you talk to someone over a thanksgiving dinner table, they can see this is the impact on my life. emily: has it been a culture shock? matt: [laughter] yes. between the worlds of technology and government, these worlds don't often speak well together. you can come into a safe spot and learn about how to speak the other language. emily: you worked under the trump,dministration, now what has it been like working for very different presidents? matt: we care about implementing systems so government systems, millions of that people use work really well. we have had support in both administrations. it is not a partisan issue to broken, and itis
is a system whether of any written -- a venerated -- for that service to work well. we have gotten great support, and we are gratified to make progress. emily: the president is taking on google, facebook, accusing them of bias. is that fair? much in my mind, i am not worried about if you have a doctor that wants to submit a payment for medicare, does that system work? it is fun to talk about after-hours, but in the same way d.c. doesn't understand silicon valley, silicon valley doesn't understand d.c. the more cross-pollination, the better. emily: what does silicon valley need to understand better? there has been backlash. matt: i was at sxsw and somebody pitched me on a startup of an
ultra -- altered reality dance lesson. silicon valley can think about services everybody needs, not just a few. emily: many presidential candidates gathered there and are taking on big tech and we are seeing state attorneys general exploring whether google presents an antitrust case. do you think it does? matt: i don't want to take a position on that, but from the time i worked in government, there were people working to make sure the best quality of search results showed up. it is a question of the federal trade commission, people looking at consumer harm and good. emily: what about the broader question, elizabeth warren saying big tech needs to be broken up, amy klobuchar saying she wants an investigation? do you think big tech needs to be broken up? matt: for me it is not a matter of breaking up as that big
companies should realize they will be scrutinized. most realize that and are starting to accept the fact that they will have to think about their impact not just amongst consumers and markets but throughout the country and world. emily: you handle some of the most sensitive data, like medical records. google and facebook have sensitive data. trust them?we can't matt: if a tech company or any loses the trust of its consumers, people will leave it. , stopan take data out doing facebook or whatever. the part that interests me is if you think of the u.s. government, what is the trust and how can we make it work better. that came outll where the u.s. government was listed as if it were a company. it was dead last in the list.
there are a lot of ways technology can make people work better. emily: we are seeing areas where technology is failing. there was a mass murderer in new zealand, video getting on facebook and being reposted. in that case they were powerless to stop their own power. what we learn? the notion of something you don't want to show off, like spam, then the notion of real-time things you don't want to show up. this idea of something going viral and people livestreaming really terrible stuff, i suspect tech companies haven't had the time to adjust to that specific model. i would not be surprised if there are engineers throughout cancon valley on how they adjust. emily: we are seeing amazon and microsoft work with the
government. this has caused employee protest around google. the pentagon said google ended a contract to help the government interpret aerial drone footage using google ai. is that a mistake? people can have different viewpoints. i was speaking to the ceo of microsoft. we asked him questions. he had an interesting position that said microsoft is a platform. it should allow all kinds of people to come in and you can't anticipate different ways somebody will use a platform. it is the case people will be grappling with these issues for some time. emily: microsoft has made different decisions from google. google said they will not work with the pentagon whereas microsoft in the face of protests that we will continue to work. he is one better than the other -- is one better than the other?
matt: microsoft is used to producing tools and doesn't worry about empowering customers. it shows the power that individual engineers and product designers have in silicon valley to make new changes in their company. if anyone is going to vote with their feet, we have lots of nonpartisan things to work better. emily: what are your top priorities for the digital service? matt: veterans, how to improve health care. there is a lot of things like moving servicemembers' families. it is more stressful than it needs to be. we were honored to partner with veterans affairs to build a new website called v.a..gov that makes it easy to access benefits. you have got 50% women, 60% in leadership and 180
technologists -- how did you do that when google and facebook cannot figure it out? conferences,o celebration of women in computer , lesbians who tech -- but we look all around the country. we want to go to arizona, ohio. what we have found is we get better results to our people we work with when we better represent america. we get to not only advertise our mission and impact and the things government can do well but we can also say you can have a leadership responsibility here. cutts. matt from credit card services and hotels, this japanese e-commerce giant does it all, but can it keep up with amazon? this is bloomberg. ♪
emily: since pioneering e-commerce in japan, rakuten has expanded to more than 80 businesses. banking, insurance, online ads and drug delivery. they are losing -- drowne delivery, but they are losing to amazon. representative a to talk about the e-commerce. >> our model is to create a membership program and use data so we can [indiscernible] provide to our merchants. emily: in japan some would say you are losing shares to amazon in e-commerce. so. do not believe
totally different aspects of the how to count. emily: how would you characterize competition in japan? mickey: it is difficult to compare but as far as we are concerned, we are growing at the right speed. the challenges, logistics, we are engaging in logistics. jeff bezos might be distracted. mickey: i think amazon is not concerned about japan. emily: he has doubled down on india. do you think they have not taken full advantage of japan? mickey: it is a different market. the consumers are sophisticated. the quality of product is high. they want to receive very clean package, not the amazon approach in the u.s. will do well in
japan. more small stores, small merchants. we need to make them happy. the conception is different. we are more partnership driven. amazon wants to, -- to dominate. mickey: who is a bigger threat, jeff bezos -- emily: who is a bigger threat, jeff bezos or masayoshi son? mickey: everybody is a rival. we are one single service provider focusing one vertical. we provide our value as a package including inking, insurance,edit card, shopping, travel, content. so if you want to focus on one vertical, it is risky. son is asayoshi competitor in the wireless and now has a vision fund investing
in tech companies. what do you think of the vision fund? mickey: he is an excellent investor. he may or may not make it. competition in japan, quality across our service will be better than anyone. for sure. we will be go to 5g, 5g from the beginning, only company in the world. good.k the future looks there will be competition. they will try to do everything to block users moving to rakuten. maybe our growth will not be as fast as we think, but the verytural difference is clear. and i don't think anybody can
match our quality and price. emily: one more question about the vision fund. do you think there are any issues with their ties to the saudi government? mickey: it depends on philosophy of the company. about takingeful money from [indiscernible] careome companies do not because money is money. but it depends on the character of the founders. some companies i have seen are becoming more careful about the source of the money because these innovation companies are very, very emotionally driven. it is more value driven and about money. money,ople are about
some people don't care. emily: is that a mistake not to care who endure mickey: for me -- emily: is it a mistake to take money from the government tied to the murder of an american journalist? mickey: we don't know the true story. i don't think i can answer. company, wefolio advise to be careful. emily: my interview there with the rakuten ceo. you can catch the full interview wednesday 9:30 p.m. eastern, 6:30 p.m. pacific. that does it for "bloomberg technology." on thursday we will cover lyft's ipo roadshow. bloomberg technology is livestreaming on twitter. you can check us out @technology and follow @tictoc.
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haidi: welcome to daybreak australia. i am haidi stroud-watts. shery: i am shery ahn. sophie: i am sophie kamaruddin. we are counting down to asia's major market open. haidi: here are the top stories. power, patience and a long pause, rates will stay on hold for some time as the fed watches the global situation. sterling falls as theresa may request a brexit delay. the e.u. says it is up to her to