tv The David Rubenstein Show Peer to Peer Conversations Bloomberg June 9, 2019 1:30am-2:00am EDT
emily: welcome back to the "best of bloomberg technology." i'm emily chang. google announced it is set to buy looker $2.6 billion expanding its offering to help customers manage data in the cloud. the deal is google's biggest since the smart home company acquired for $2 billion back in 2014. we have all the details. >> i am not sure if i would call this a big acquisition in terms of google's size. $2.6 billion is a lot of money, but when you're talking but the cloud world where we have seen acquisitions like github in the last seven to eight months, this is pretty small.
there was a lot of pressure on google to do something to expand its size, at least from the analyst community and investor community. we can debate whether google cares what they have to say, but this acquisition was not as big as a lot of people were hoping for or expecting. as you explained in the intro, this is an incremental change. it is a product that a lot of google cloud customers are already using and they will be able to sell them together. emily: we were just looking at graphics showing past acquisitions, and one of their biggest acquisitions, motorola, didn't turn out so well. some would argue that the nest acquisition has not been a success. otherwise, double-click, youtube, waze for sure turned out to be phenomenal. i wonder if google is scared of its own track record. gerrit: google generally believes that it can solve its own problems. this is an engineering focused company. this is a company full of
essentially the smartest people in the world who think they have the right answers for things. a lot of the products they have developed that have been successful, chrome and search ads, which is potentially one of the most successful tools ever developed in history if you look at pure profit. generally, the attitude within the company is to build rather than buy. not all solutions you can build on your own. emily: google is third to amazon web services and microsoft in the cloud. they've got a new ceo, who you spoke to today. he told you people asked us for months, are you rushing to do acquisitions? we have been very disciplined in building sales, market capability, and have chosen looker as a complementary technology that a lot of customers will find value in
very quickly. what did he have to say to you about buy versus build when it comes to gaining share in the cloud market? gerrit: obviously, he would not tell me what his acquisition strategy was going forward, but it is true. most of what he has been talking about, despite being asked about m&a to his own admission has been about building his own sales force, focusing and narrowing google cloud's focus on a few industries, and getting good at selling into that. google is an engineering organization, they have not always had a strong sales culture. that is what he is trying to build. i think if we take them at their word, that will be their focus. maybe these more bold on, smaller, incremental acquisitions will be the norm rather than a large transformational one. emily: meantime, you could call it a more incremental acquisition, but washington is turning the screws on big tech, examining potentially google and alphabet for antitrust issues. is now the right time to be doing this? gerrit: this deal was under works before this weekend when we saw the latest news about a
department of justice investigation into google regarding antitrust. it is important to note that in the cloud, google is not dominant at all. they are far behind amazon and microsoft. they have had trouble closing that gap and they are far from meaningfully catching up to those two companies in the cloud space. truly looking at cloud is not going to be the approach that regulators will take. but of course in this political environment, facts don't matter much and i am sure that there will be some people who use this as another political point to show that google is getting too big. emily: meantime, google is leading the way in the business of streaming games to the internet, introducing pricing for its titles ahead of its competitors. i spoke to the vice president at google. >> i think what we are offering is incredible value for gamers. remember, they don't have to buy any hardware. there isn't a custom game
console or high-end pc that normally costs hundreds of dollars. for $129, you get a controller, limited edition controller, you get a 4k streaming chrome cast, you get the full "destiny 2" experience and three months of stadia pro. it is an incredible value. gamers can play the games they want to play without having to go through the hassles of downloading and installing and patching and updating and all the rubbish that sits around traditional consoles and pc's. emily: don't you think we are facing a subscription overload with all of the entertainment streaming subscriptions? certainly there are many other gaming alternatives. what is going to convince gamers to choose google? >> what stadia represents is a phenomenal value. the games that gamers will get to play they can use on any screen. their tv, their pc, their laptop, tablet, and phone.
no other game service does that. so, the value is incredible. but we also recognize that not everyone wants to subscribe. in addition to the stadia pro, which is $9.99 a month, there is stadia base, which is free. they can buy the games and play them when they want to. emily: are you trying to get exclusives? gerrit: of course. yes. we have recently announced the formation of stadia games in entertainment, which is our game development organization led by a renowned industry veteran, jade raymond. she will be building out our exclusive content for stadia. plus, we are working with a number of third-party companies to bring their games to stadia exclusively right now. emily: game streaming is on the rise. you have microsoft and sony doing something together. you have got apple arcade. potentially your price could impact the price they decide on their service. what are you expecting from the competition and how are you positioning yourself relative to them?
>> first of all, i think this is a general trend in the industry, as we move toward the streaming future. the technology is there now and obviously google has some extraordinary capabilities in this area. we have been investing in data centers for 20 years, so stadia is standing on the shoulders of giants of the technology that built and created youtube and other high-performing services that serve billions of users. the timing is ready now to deliver a very high-quality experience to gamers. stadia allows you to stream at up to 4k, 60 frames per second. that is only possible because of the innovations we have made. emily: do you think game streaming will take over before there is a new generation of consoles? >> i think game streaming gives players an alternative, and it is a future direction for the industry, but it is not going to happen to everyone overnight. i think that the good news is that the innovation means better
games, it means better content for players. so, what a great time to be a gamer. emily: does the innovation work with multiplayer games? there is skepticism that streaming will not work on a multiplayer experience, be any better than a console or a computer, and can you do it better than microsoft and sony? >> the great thing is when you have a streaming technology, the multiplayer experience is even better, because all of the players are on the same technical backend, the google back end. all of the players are connected via the same proprietary google technology using our own fiber networks, on which there are hundreds of thousands of kilometers worldwide connecting all of our data centers. actually, the experience of multiplayer will be far better than you can get on traditional, historical platforms. emily: how would you rate the experience now? this is a technological problem that you have been working on. how much of the kinks have you worked out? how seamless is this? >> we have been working on this for a number of years. we have been testing privately inside of google for a number of years.
we tested publicly last year we tested publicly last year with project stream, partnering with ubisoft to bring "assassin's creed: odyssey," which is a demanding, graphically rich title. we learned a lot from that experience testing with hundreds of thousands of people, and now what we are able to do is to innovate even more in the way we compress the data and bring the high-quality experience into people's homes. emily: phil harrison, google vice president. coming up, the rise of digital dissidents in china, how they are testing beijing's great firewall. we will discuss next, this is bloomberg. ♪ emily: the regime of china's
bloomberg businessweek editor jeff muskus joins us. jeff: some like the folks at greatfire.org, a collection of activists that have been up and running since 2011, they do their best to provide a jumping off point for people who are in china and want to use -- either through browsing tools are or social media -- a different kind of site they don't normally have access to if they abide by the china rules of the road. but we also spoke with folks including laborers that may be planting trees and spraying pesticide, they are unlikely activists as it gets tougher and tougher to speak up online. emily: i was living and working in beijing for the 20th anniversary for the tiananmen square massacre.
that was about the same time facebook got shut down and twitter got shut down. and any time we aired a story about tiananmen square or showed a video, that would be blacked out in china. how has censorship changed or increased under the regime of xi jinping? it has always been there, to a certain extent, but it has gotten more restrictive and not less. jeff: he certainly made good on his annual promises to crack down harder and harder on most of the ways that people are allowed to express themselves online in china. some of the biggest tools at his disposal to do that include very publicly cracking down on apple to force them to remove hundreds of virtual private network apps from their app store. if not counterproductive, it has not been unsuccessful.
emily: there was a sense when i was there, and it is 10 years ago, young chinese students were much more concerned about getting a job and more concerned about the economy than they were about political freedom. do you get the feeling that is changing? or that there is more of a push back against xi jinping's regime? jeff: you are probably right that there are a lot of people that are still very happy to sort of put their heads down and not become targets. the lesson of the story is that it can be a very lonely fight. and so the folks like the great fire people operating from the shadows or these laborers that are willing and have spent time in jail for complaining online about things their local government officials are doing, they tend to argue that the case
they are making is to try to slow the sensors down or get people to think twice about the compromises they are making. if you have any illusions they are not turning the tide just yet. emily: big tech started mounting defense long before the federal trade commission divided oversight of the biggest tech companies. the big four have been spending big on lobbying and staffing the in-house legal teams with numerous antitrust lawyers who served in the government. in the first quarter of this year, amazon, facebook, google spent a combined $11 million on lobbying. we have a discussion. is there a sense these companies foresaw what could happen given what was happening in europe, and started to prepare years ago? david: you definitely get a sense talking to people close to
the companies down here in washington, outside lawyers in their policy shops, that something like this was almost inevitable. there was sort of a feeling that some of these companies were resigned to some action in one form or another. you had some of the companies that are pointing at one another about who is most at risk for an investigation. a lot of this comes down to the fact that there is so much in the atmosphere in washington, so much criticism of the companies both on capitol hill among antitrust lawyers and economists at conferences. you can go to conferences almost once a week where this is a subject that is being talked about. emily: what are the companies themselves officially saying? we are getting dribbles from outside counsel, sometimes from sources within the company, but do we have an official party line? max: no, i think officially,
these companies are very conscious of the ways in which they have let people down. we have seen that messaging come out of facebook and google most clearly where, you know, you have a lot of talk about responsibility and a renewed focus on our role in society. just to build on what david was saying, a couple of years ago, when we saw mark zuckerberg going around the country on this weird photo tour where he was posing with iowa farmers, everyone was kind of scratching their heads and saying what is he doing? in retrospect, it was clear. he was preparing for this coming storm. when you look back and think about tim cook stepping out and becoming more of a voice. a lot of tech leaders years ago started to realize that this was coming and started preparing and started working in the public relations levers. emily: there was speculation of zuckerberg running for president
back during that tour which now teams a lifetime ago. talk about the people joining these legal teams. who are they? they are coming from the doj, former doj folk and elsewhere within the government? david: many of these companies have hired over the last year, well before this week's news, a number of antitrust lawyers who worked at the ftc and the justice department. and these are people who have experience in conducting investigations into conduct as well as mergers. they also have very large public relations and policy shops here where they conduct their lobbying on capitol hill. in addition to that, they all have very prominent law firms, armies of lawyers who would be ready to go to work if this thing, this scrutiny turns into real investigations.
emily: in addition to industry trade groups. max, the idea we seem to be getting from officials talking about the company's positions is that these companies will try to make the case that they are actually better for competition than not, that they support small businesses and competition between small businesses. do you think washington is going to buy that argument? max: it's hard to say. it depends on how you look at it. it's 100% true that online advertising has created opportunities for smaller businesses. the other thing about this from an antitrust perspective, antitrust laws are mostly focused on consumer harm. all of these companies are -- google and facebook are offering services for free. amazon is offering lower prices. it is hard to see how you make
an argument for raising prices. the issue, the vulnerability for these companies is they all have these big, dominant networks, so if you want to buy a search advertisement, there is only one company, google, that will sell you search ads, pretty much. there are smaller players, but their market share is tiny. if you want to be in social media, there is one company. if you have a nap, there are two options. the fact that they have these dominant platforms is going to be the focus of any antitrust criticism or inquiry. emily: still ahead, how one company is bringing ai to organ transplants. they are pioneering what you could call it medical miracle. this is bloomberg. ♪ emily: matching organs to
death. there are currently over 113,000 americans waiting on the national transplant list. finding a donor is not the only obstacle. roughly one third of organ transplants are rejected by a recipient's immune system. a molecular diagnostics company is improving that process by bringing ai to transplant care. the company has developed a genetic test to match organs with recipients as well as technology to monitor the immune system post operation. joining us is caredx ceo peter. peter: there are two big issues in organ transplantation as you were mentioning. on the one hand, you need to match an organ to a recipient. then after transplantation, you need to care for the patient throughout the lifetime of the patient. we are applying novel sequencing technology to match the organ with the recipient. after that, we are using the same sequencing technology to care for the patients, detecting rejection episodes early. making sure physicians have the information to treat the patients and prevent rejections from happening. emily: how does the sequencing
technology work? how is it different from a matching process without your technology? peter: this is next-generation sequencing. it is the future in diagnostics. we are applying this technology to match an organ with a recipient on a very granular level. we do that with transplantation and owned marrow transplantation and in transplantation overall. in the post transplant area, we can actually detect the dna of the transplant in the bloodstream of the recipient. that is a very novel technology. it is revolutionizing how we can care for patients because it can detect rejection episodes earlier. add on the artificial intelligence platform that can allow the clinician to have a deeper insight aggregating all of the various data streams. it allows them to make better decisions in potentially detecting issues earlier than they can today.
emily: how are you improving success rates? what are the numbers? peter: we have a clear goal to improve the patient's life by three years. we are aware of the ability to impact this and we are building an amazing platform in order to do so. we can focus on immune modulation, focus on compliance. making sure patients are taking their medication and seeing their doctor on a regular interval. afterwards, we can focus on standardization and precision medicine, individualizing the care for that patient is what we are all about. we are applying position tools to the team of transplantation. we have a tremendous platform to deliver and partner with the transplant ecosystem to make that available for transplantation. emily: your revenue grew 85% year-over-year. how does this scale? how do you get this tech algae
assessable to more patient and more recipients? peter: this is really an amazing growth story. we have built this tremendous platform in transplantation medicine. over the last 18 months, we have achieved 5% patient penetration for kidney patients in the u.s. we see this $2 billion market opportunity. when we talked about this to billion dollar market opportunity four or five years ago, people were wondering why that is. the transplant patients live for 10 to 15 years and there is a recurring revenue opportunity. we test them throughout the lifetime of the patient. caredx has a model that follows these patients over a long time, which financially is very attractive. but more importantly, we are changing patient's lives by detecting rejection episodes early. scientifically very interesting. emily: how do you expand this technology? is there any ability to expand beyond organ transplant?
peter: transplantation is unique opportunity in the context of being at the pinnacle of medical science. you called it the miracle of medicine. it truly is. really, innovation happens at the top of the innovation curve. if you have innovation at the top of the curve, this will allow us to learn a lot for other areas. we are doing transplantation for the top 200 medical centers in the united states. once we have built an ecosystem that allows us to have artificial intelligence and augmented intelligence, we integrated into electronic medical records and we can roll the platform out to many other areas. emily: that was peter maag. that does it for this edition of the "best of bloomberg technology." we will bring you all the latest tech throughout the week. we are live streaming on twitter.
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