tv Bloomberg Technology Bloomberg October 10, 2019 5:00pm-6:00pm EDT
someone may be watching your footage. and roku's stock surges after the prediction that the company will triple its user base by 2022. first to top story. hoping tond china are ease hostilities in their 18-month trade war. the white house is considering a partial deal that would include suspending planned tariffs. josh wingrove joins me now. what do we know about what could evolve from the latest talks? >> just now president trump spoke to reporters on the south lawn of the white house on his way to minneapolis for a rally. he said they just completed the day-esque about negotiations and said they are going really well.
he said really well and very very well. we have the meeting scheduled tomorrow at the white house with the president and the chinese vice premier. we have zero details right now in terms of subject matter that they might have made progress on or didn't, whether it is still looking for more of a bite sized deal or whether they are talking toward a broad comprehensive deal that the president wants but for now the president is giving positive signs. it has been 18 months. is a partial deal better than no deal? josh: i think any deal is better than no deal. i was triggered seeing video of that deal toom nafta. there were efforts at what are called harvesting which is taking all of the stuff agreed
on, putting that on with a bow and moving on. trump has been resistant to that in the past. he signaled publicly that while hisould consider anything preference is a big deal. the problem is that will take more time. they thought that they were nejra deal earlier this year. whether they can get back or not is the open question. taylor: we frequently get tweets from the president. one of them stuck out today where he tweeted china once a deal, but do i? >> guessing what he means is my job these days. i think trading partners have learned to shrug that off. to thes to be invited table rather than inviting people to the table.
what he has been saying for weeks is that he thinks china wants to make a deal and he think's china is being hurt more by the tariffs than u.s. consumers are. can wait that the u.s. this out longer and therefore he thinks china will want to deal more with the u.s.. he's good with the tariffs as they stand? any sense why we are getting resolution on smaller deals? soybeans butmore not ip theft. >> it's a great question. these are things at peter navarro and white house officials have been talking about a lot. now they are not getting into specifics. if they get that interim deal, trump wants agriculture as an election issue.
tell farmersl to that the chinese are buying a lot of their crops, but they really believe that the core issue are things like ip theft. there is bipartisan support to go after china on these things. those issues will remain core to a larger deal going forward. taylor: thank you for joining me. protection is ip among the made points of the trade talks, is the market still a problem in china? if you are among the u.s. companies that would like to protect its international property, you might like our next guest. what does he do? >> supra and super and good glow -- super and global. it's a fairly large company in china.
revenue thation in protects international property for clients who have mostly been in china and is now starting to expand into the u.s.. that's what we're doing here at our company based out of boston. taylor: you were talking a lot about the trade talks going on, what kind of ip theft anguish do you need to see to get a deal. therdless of the status of trade talks, the importance of securing ip protection for u.s. companies operating in china should not get lost anywhere. companies shouldn't be missing out on that opportunity if they're going to operate in the chinese market. since many things are manufactured in china they are in that market already.
stealing the ip of who? >> this a good question, what are we talking about when we talk about ip theft. it really needs to be defined better. we hear that routinely. what are we is, talking about specifically. we don't hear a lot of specific examples that are recent. i think most people tend to think of ip theft as being counterfeit goods and that is a very real problem that exists here. it exists in china and is a problem for any manufacturer outside of china. where we tend to think of ip is in the patent world where you what you are disclosing when you get a patent is getting it not just in the united states but in china.
china is fairly open to protecting their markets for anyone by filing and protecting it with patents. what do you think about beijing given that the relationship between the u.s. and china is not the best right now? >> if we take the battle and put , whenside for the moment you get a patent in the united states you're telling the world -- you have the right to exclude others. the only have a right to exclude others in the united states. thene from anywhere in world can look at your patent, see how to practice it, do it and if you're not protecting it in the country were some is doing it you don't have any protection.
largely a situation where you want to file for protection in china. if you're going to be filing for protection at all. it is almost crazy not to be doing that if you're going to be operating anywhere in the world aside from the united states. what countries that you work with are you concerned about most? >> we work with companies that run the gamut from technology and life sciences. we are not trying to re-create the distribution mechanism that -- in the u.s. it is done through ip law firms. what we are trying to do is make for any, efficient
u.s.-based inventor to get that protection in china and working with the law firms. taylor: i chuckled a little bit in a recent article that you did. you mentioned it wasn't the chinese stealing your ip, it was the canadians. outside of the conversation with china, what are some of the other hotspots where you see ip theft? amount where fair things are manufactured. i was joking about the canadians. that was many years ago when i was an inventor at another company. we sued a canadian company for patent infringement and that is an interesting issue that exists in china. if you are a plaintiff, a foreign plaintiff and you sue for patent infringement, you will win over 90% of the time. if you ask a u.s. patent
attorney what are your chances states,ng in the united the best guess you will get is that it is 50-50. in china, the odds are in your favor. interesting. give me a sense of the attorney fees that go on if there is theft of your ip or patent infringement. >> what is interesting about the patent and ip infringement market is that it is generally done by agencies and not law firms and the cost factors are considerably lower. i don't know that it is an order of magnitude different in price, but it is probably going to cost you on the order of 20% to 30% of what it would cost you in the united states. there is no reason not to do it.
regardless of the status of the trade between the countries. taylor: i learned much about patents today. thank you. up.ng the internal revenue service comes out with new rules on cryptocurrency, and at least one accountant says his clients are worried. if you like bloomberg news, check us out on the radio, the bloomberg app, or bloomberg.com. this is bloomberg.
taylor: a slew of new tax rules for cryptocurrency investors. we are exploring what they mean. first, tell me what we know about this new guidance. >> the irs is playing catch-up. 2014, the cryptocurrency market has turned into a $200 billion market. investors have been demanding greater clarity and guidelines. the irs is responding to this demand but too late according to many. taylor: you said they are taking a page out of the swiss bank's playbook. what do we know about that playbook? in billions ofed
dollars going after americans with swiss bank accounts and they did it without doing a lot of work. they did not audit many people or prosecute many people but they got everyone to come forward by scaring them and gathering data from swiss banks. everyone thought that the swiss bank was impenetrable. now all of those things are open. theor: what -- one of complicated issues around crypto bitcoin and ben bitcoin cash. how are those treated? >> the new guidance as if you have bitcoin and magically in your account tomorrow, you have bitcoin cash, that may be a moment where you have new tactical -- taxable income. attorney, it begs the
question of what is income. if someone throws gold coins into your swimming pool, is that income? if you don't use your bitcoin cash, do you have taxable income? that is what this is trying to address. taylor: how can the crypto exchanges respond? >> they are waiting for guidance from the irs and the irs is waiting for guidance from congress. if you have a trade on the crypto exchange, you don't get a sold sharesif you of microsoft. it seems like congress could step in and give clear rules. it would make tax reporting easier. taylor: is that what we need as a next step with the exchanges and the irs playing chicken?
issuey are having to enforcement against the exchanges. sue coinspace to get their records. taylor: you started this conversation saying it is a few years late. better late than never? there's a lot but of ground to cover and the irs just sent out letters to cryptocurrency investors warning them to pay their taxes. it's one thing to warn them, but it's another to not give guidance on how to pay. coming up, we will hear from the former nasdaq ceo who has experienced turning nasdaq into a powerhouse for tech ipo's. this is bloomberg.
taylor: here is a look at today's top tech calls. price target were cut from 370 to -- have grown fearful that netflix will miss subscriber estimates this quarter. the company reports third-quarter results august 16. -- on the 16th. stated that he sees the evaluation is more compelling. company'sews the
fundamentals as among the strongest in the small-cap internet sector. balaton was rated as the new neutral. shares closed thursday at around 23. , there is one by and one hold on the stock. when bob took the reins of the nasdaq in 2003 he knew that he had his work cut out for him. the executive got off to a running start. made nasdaqss he into a very different institution. on thursday he spoke to david book >> the his new most important move we made was to buy inet.
a lot of the high-frequency firms use some version of inet today. after the 47 acquisitions that we did, the only one we had to inet. independent of we were losing market share every day and losing money every day and we did not have any technology on the shelf to improve it. the rest of the acquisitions were optional and we were using it to build on further strength. >> so that was going nice but then 2008 happened. tore was stress on everybody clear all of the trades coming through. afterward, j.p. morgan called you in not a friendly way. some four-letter words there. we worked well through the crisis.
bentwas nerve-racking, we but we didn't break. it was a professional disagreement in terms of how things would play out. we lived through some difficult times with facebook and to his credit he gave me a call during some of our darkest days and said you will get through it. >> talking about that facebook problem -- problem, it is treated in the book fairly directly. big loop.t as a we had a cde the engineers the king of the ship. was my issuet because i created a culture where the engineers could over develop systems without any checks from the people running the businesses. we learn from it, we became a
more balanced organization and a better organization. >> right now there is a big discussion about ipo's at nasdaq as well as direct listings. didn't you start out with a direct listing before you got there? >> we did it when i was there. i think that the direct listing will have a niche. it's not going away but it's not going to take over the market. you have a brand in the investment community and that direct listing comes into frame and you have to make your decision. the advantage is you don't have to get involved with what is the right price. downe stock is up 40% or 40%, i am the ceo of the board and i don't want to be in that game to decide how to play that. so you list first and then raise capital a year later, you will
know the price because the stock is trading. that is an attractive alternative to some, but not many. >> we have had several of these ipo's go out and certainly the investment banker did not find the right price. >> that has happened. i would also say this, the public markets will discover the right price with a lot of higher frequency than the private markets. when you look at the source of some of these issues you have abnormal price discovery happening in the private market. market is primarily a bilateral deal between uni. in the public market you have a lot of people in it and the odds of getting the price right is higher. taylor: that was the former nasdaq ceo speaking with david westin. coming up, bloomberg's scoop.
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taylor: this is "bloomberg technology." now to a bloomberg scoop -- just months after learning and amazon and was transcribing annotating commands recorded in customers' homes, another privacy issue has emerged. bloomberg has learned the online giant may be watching some of footage.d cam matt day, who covers amazon in seattle, is here to explain. talk to me about what the bigger
story is here. is this a privacy concern or the fact that frankly amazon is admitting a little bit the cloud cam cannot do it all, it actually needs humans. matt: basically anything these companies market as artificial intelligence probably has a human playing some role. it might not be a very large role. amazon told us humans only look at clips if you submit them for troubleshooting, say something did not work, or a notification was wrong, or in case of employee trials. folks who had a sense there might be some review of their clips. there might be a small percentage of the total volume of video out there, but still an indication amazon thinks they cannot do this with algorithms alone. taylor: when it comes down to some of the privacy issues, like you said, amazon saying it is only when a customer submits it for troubleshooting -- is that enough transparency? matt: you know, i'm not sure.
amazon, like a lot of companies, does not go out of its way in privacy policies and terms of service and faq's they post on this stuff for consumers to read to really walk them through what they are doing to make the experience better or the product and service better. a lot of that goes on behind the scenes, and after companies get from you these big blanket permissions, they do not take the next step to handhold you and say, "this is what we will be doing with it." i think that is what caught a lot of people off guard with the revolutions, -- with the revelations earlier this year. consumers just did not take that step with them and had no idea. taylor: it is interesting. you went through the terms of service, and you know in your great article that they do nothing to say that there are or could be human review of these videos. at what point do these companies start to become more transparent and say in their terms of service there is the potential for human review of this?
matt: i think they have already started that, but it is baby steps. amazon in particular has now websited this on their information about their alexa service that humans do review a small sample of sort of the total voice volume, and they give you the option to opt out. i think that is kind of the disconnectthe street knows about these programs and what the tech companies assume they know. they are doing, but there is still a little bit of a way to go on that. technology's"berg matt day, thank you for joining me. roku had its best day in about two months on wednesday after macquarie research upgraded the stock. it was the first such move in analyst since a sharp recent decline in the shares of the video streaming platform. to discuss the move, i bring in tim nolan of macquarrie.
you did move the market on that call. talk to me about why you are so bullish on roku, given the heightened competition in this space. tim: sure, there's plenty of competition and we highlight that pretty thoroughly in our notes. 175stock had come down from dollars or so to about $100. it is partly the international expansion we talk about in our report. roku has gone from almost zero to some large number internationally, and we think they can get to approximately their size internationally that they are in the u.s. now in three years. on top of that, i think the growth story, connected teams and advertising is growing strongly in roku has built itself a great position to grow into that. taylor: let me parse down a few of the points you hit on. one of which was the stock all in from $170 to $99 in a matter of two or three weeks. how much of this was purely from
a multiples standpoint? it looks relatively cheap. you could certainly argue it got quite expensive. i think there was as much sector rotation going on at the time as anything the stock went from 55, i think was its recent low, up to 170 in the space of 3, 4, five months. any time you get that quick a move, it is not surprising to have it come back and take a breath. there was increased news of competition. we heard about amazon fire tv. we heard about comcast with the flex product, which i really don't think is a competitive issue, but more competition coming at the time, it is just the wrong combination of factors. taylor: you mentioned international expansion being a key for the catalyst going forward. what types of numbers on that
international side do you need to see from the company to maintain your thesis? >> the thing is we really don't know anything about the international expansion or the strategy. we know one or two bits and pieces about markets and devices, but we don't know the rollout schedule. what we have done in our report is try to lay out what we think is a reasonable assumption based on connected tv and attrition rates into homes where roku can get. that is where we are getting our estimate. another way to look at it is on the advertising side. again, this is really the more important story for them, the advertising platform. if you look at connected tv advertising growth, it is growing double or triple the rate now from a year ago. if you put a more modest assumption of growth onto that and layer that over a few year'' numbers weet to the rokuto for r.o.e. to's --
's growth. taylor: does that help roku differentiate itself? >> i'm thinking of the competition more in terms of on the device side for someone like an amazon fire tv that i thing is getting more aggressive with their device rollout, and it is a very aggressive strategy or very differing strategy between roku and amazon. with think of roku as somewhat , quitelled garden different from what amazon has begun doing in the last month or two, which is opening up the platform to some of the demand-side platforms to buy more openly adds on its amazon fire tv. very different strategy from these two different companies.
supply and price pressure from fast-moving chinese rivals. the conglomerate will build millions of dollars building and rebuilding generation displays, one of three areas in which samsung is the world leader. the others are memory chips and smartphones. food delivery remains a tough market. front runners uber eats and the u.k.'s deliveroo remain unprofitable and we continue to see consolidation with established giants takeaway.com and just eats preparing to merge. bloomberg sat down exclusively with the ceo of delivery hero to .iscuss competitive space >> we are winning market shares in every region against every competitor globally. we are on path to be the largest food platform by the end of the
year. we did less than 500,000 orders in a country like taiwan. do 7.2onths later, we million orders per month in taiwan, three times them and a mom orders we did in germany. areee that the investments really paying off. >> you see more of a future in emerging markets? you have gotten out of a couple of developed markets recently. you mentioned germany and there have been others. will you be selling more developed market businesses to focus on the emerging market space? >> we are generally focused on markets where we see the best return, the highest frequency of customers, where we see the best return on every single incremental order. but also in some eastern european markets, we see very good returns. right now we seem to have a very good footprint where we have no
general interest of selling in markets but doubling down. >> what you are trying to do and some of those markets is deliver more stuff, so not just for food but to be a little bit more, dare i say it, like an amazon. are you not concerned that the margins in that kind of deliver everything business are a little bit on the low side? >> our main focus is deliver what customers really want and work backwards from there, finding ways to make it happen. that's why we look at groceries, pharmaceuticals, payments. if you take an example of this, it would be turkey. we start delivering from our warehouses where we can deliver in 13 minutes, which is way beyond what amazon can do. we are not working to improve economics. we reached a point where we can deliver things on good economics, and we see that particularly in this quarter. our business and logistics proficiencies are improving profitability per order, and that is very encouraging. >> as you look into the future,
what percentage of your business do you see being in food delivery and what is in other logistics provisions? >> i still think that food and hot food is our main vertical, and that is where we have our core, and i do believe that is probably still 90% of our business, but from time to time, it needs something. we want to be there for our customers. we want to be that platform. >> why be in that business? >> we want to make sure customers can go and stay on our platform when they need something. also, having them continue to come back to our platform gives value. if at that time you can deliver your toothpaste that evening you really need it, you will build strong love for the brand, but on the other occasions you might order food and get that delivered, but you will remember that experience. grateful,h will be i'm sure. what makes a successful market for you? is it a culture of food ordering or traffic on the roads?
what differentiates the really profitable markets from the rest? customers coming off the margins and what we see in this market as it can drive very good profit contribution per order. as we get scale in the middle east, we start turning very good profits, or europe. we have reached that breakeven point. it is just about scale. thingsain, economics look very good. >> that was delivery see -- delivery hero ceo niklas oestberg. >> 100 million hours of video gets uploaded just to youtube, that one channel in one day. every day, there's over one
billion posts on facebook. you're right -- it is who is out there listening to your content if everyone else is constantly making their own content. is it going to go down? is it going to be oversaturated? in 5, 10 years, what will we be looking at? >> i think there will almost be a layer of cure ration like in museums. with so much content, there is going to be just exhaustion, so people are now looking for experts to tell them what to watch. i think the pendulum is almost shifting back again to the bigger need for expert voices in news, in different areas because people are now bombarded by so much that they just -- they kind of want to be guided a little like you would curate a collection at a museum. but i also think people want more high-quality content again, so it is interesting because when it was first starting with social media, it was all about how many eyeballs you could get
on things, and now i think the metrics are really shifting back to engagement and depth. >> are the next three years going to be critical on who survives and who gets it? >> absolutely. it is going to be could tickle and companies will have to make sure they are playing in all of the new spaces. that's why we are talking about audio so much at zuckerberg media. i think it is one of the only spaces at the moment where there are more people listening to podcaststhan there are are regularly updated. there was a brief window about 20 years ago. that window is gone. i would not suggest to anyone today to launch a new blog. the world does not need it. it is impossible to get noticed, but podcasting and audio is still in that really beautiful window right now. i think the media companies that are nimble enough to see those opportunities and get in will survive. >> as we look at the 2020 presidential election, how should media companies look at this election if rightly? >> it is interesting because it
is so fragmented. you see there's so many candidates, so many people that are thinking that have passions around different issues and different topics. i think, you know, gone are the days when you had a few sources that really go to places to turn for an election. i think media companies have to almost think of themselves as 20 or 30 tiny little media companies or arm their employees to be individual media companies in order to be reaching the most people that they can, but it is an excitedly creating -- excitingly creative and stressful time. >> you build so much work on gender diversity and females in the workplace. what is tougher -- being a woman in charge of tech or a woman in charge of hollywood? >> that is really the question of the time. i used to joke that being in silicon valley, that my biggest asset was having a man's name because i would email people and they would not know they were emailing with a woman, so i was
able to really get ahead. i think things are definitely changing for the better. there's a lot more discussion stemming at least from the me too movement, and i am at least seeing now in silicon valley the rise of many more female investors. i think once women start to control more of the money, then they will use that to turn around and invest in other women and change the system a little, so that is what i'm interested in, but they're still quite a long way to go, especially as i sit here talking to you just three months after having a baby, and i've been back at work for quite a while, and then i sit in a city like helsinki hearing about nine months of maternity leave and things that i realize we have quite a long way to go still in the world. taylor: that was randi zuckerberg, the founder and ceo of zuckerberg media, speaking with bloomberg's francine lacqua. ahead, tim cook defends
taylor: apple has reversed course in hong kong, pulling the plug on an app that shows police activity. apple says it could endanger both police and people who live there. tim cook came out thursday to defend the decision saying the app was being used maliciously. with more, i want to bring in selina wang who joins me from beijing. what is the significance of apple pulling this from the app store? ina: this is a crowdsourcing app that allows you to see where
protest and police activity is happening. interesting to see apple is reversing course yet again after saying it spoke to local authorities that say they were threatening public and police safety. creators have said there's no evidence of this and critics have scorched the company for saying that it is basically capitulating to china's man's at the expense of free speech. to be clear, this is not the first time apple has made moves like this. a few years ago, it removed apps from the app store in china, more recently removing the taiwan flag emojis app. greater china is apple's largest market outside the united states, so there is a lot in store for the company and it goes to underscore the challenge when it comes to balancing political risks both at home and abroad for international companies operating in china. taylor: within the balance you talk about, was this really harming police or was this seen as caving to beijing?
we did hear a hong kong legislator say he was deeply disappointed in the decision and that in his view this was actually hurting innocent passersby who use the app to avoid violence. again, the app creators say there's no evidence of this being used to threaten public safety. apple said it did speak with police and authorities and did an investigation showing it was used to potentially target individual police and individuals in areas where police are not around. i think the broader significance of this also points to what we have seen happen to other companies that have gotten caught in the fray. not just apple. you have seen companies from vans to starbucks to zahra have to toe this delicate line and really get scorched when it comes to taking a side on either side when it comes to be hong kong protests. i think the nba is a really relevant example. a single tweet has threatened the entire business of a company
that in china had spent decades building their business there, and they have more than 800 million fans. with a single tweet seeming to be sympathetic to the hong kong protests, you have firms from tencent to see trip, the state broadcaster refusing to broadcast their games anymore, all distancing themselves and cutting ties to this company. we have seen beijing take a very hard line zero tolerance policy approach when it comes to companies seeming to meddle in what they say our internal affairs. >> i wonder as we see in companies like apple, you mentioned the nba, seen as caving to pressure from beijing, what does that do to relationships with hong kong? now,a: we know that right this very, very tense environment, and china has taken again a very hard-line approach saying this is an internal affair and they do not want to see western companies meddling in what they say is their own
territorial sovereignty. the tech decoupling is only escalating and the difficulties of western businesses in china is only escalating. recently, we did see chinese companies put on a u.s. blacklist. we heard china hit back very hard against that blacklist saying to stay tuned for retaliation and that china could be coming out with its own unreliable entities list that could include u.s. companies on it. the companies that were on china's blacklist on the u.s. blacklist are considered national champions. in china, you have the world's most valuable artificial intelligence company as well as foxconn and lenovo as its clients. the tense situation is only escalating. for joining meou with the latest. that does it for this edition of "bloomberg technology." "bloomberg technology" is livestreaming on twitter. check us out at technology.
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paul: welcome to "daybreak australia. i'm paul allen in sydney. shery: i'm shery ahn a bloomberg world headquarters in new york. sophie: i'm sophie kamaruddin in hong kong. we are counting down to asia's major market opens. ♪ paul: here are the top stories we are covering in the next hour. >> i think it's going really well. i will say. paul: time to talk. the u.s. and china revive stalled negotiations and will meet again friday. president trump says day one was