tv Bloomberg Technology Bloomberg October 31, 2019 11:00pm-12:01am EDT
♪ taylor: i'm taylor riggs in san san francisco. this is "bloomberg technology." coming up in the next hour, twitter upstages facebook. twitter ceo jack dorsey says they will ban all political ads as facebook sites free speech. you can't mention facebook without the cambridge analytica scandal of 2018. we hear from an essential figure
from that period. and tesla owners, they are talking in part two of a bloomberg expansive study, thousands of model three owners. we examine whether parts and services are up to parts. twitter announces it will stop all political ads on their platform, with the ceo saying it's not about free speech. it's about paying for reach. that sentiment wasn't echoed by facebook as they reported earnings and reassured their stance when it comes to political ads. facebook ceo mark zuckerberg stayed on brand during the earnings call. mr. zuckerberg: i expect this will be a very tough year. we try to do what we think is right, but we're not going to get everything right. this is complex stuff. anyone who says the answers are
simple hasn't thought long enough about the nuances and challenges. i get that some people are going to disagree with our decisions . i get that they may have a negative impact on things they really care about. but i don't think that anyone can say that we're not doing what we believe or that we have not thought hard about these issues. taylor: i'm joined now to discuss that. how much more pressure is mark zuckerberg under today than he was two days ago? >> well, i mean he was already under some considerable pressure, right, when you have people like joe biden, elizabeth warren, alexandria ocasio-cortez all piling on. i'm not sure jack dorsey really tips the scales that much more. but certainly what jack dorsey and twitter did on wednesday, it takes away one of mark zuckerberg's arguments, right?
that his peers at twitter and google are all doing the same thing when it comes to political advertising, and dorsey basically said nope, they're not. taylor: one half of 1% of revenue, which is the political ad contribution on facebook. why even get in this controversy to begin with? shira: i think that's a great question, and certainly one they have made. that facebook wouldn't be giving up really that much revenue if it decided we will just stop taking political ads and take ourselves out of this part of a conversation. i think the argument that mark zuckerberg is making, and it does feel like he really believes it, is that facebook doesn't want to be in a position where they're asked to censor political speech, right? he really sees it as a free speech argument. and there are certainly a lot of
people, particularly conservative politicians, who agree with him. but he does feel like a principal stand rather than a stand that is motivated entirely by money. taylor: shira, facebook has one half of 1%, twitter has 500 of 1% of the revenue coming from political ads. so, why their decision to weigh in here? shira: so for twitter, it's an easier decision to say we're going to stop taking candidate ads, ads related to hot button issues like health care, or abortion, or taxes. because those kinds of marks missed are a tiny fraction of a company that is already the size of facebook. twitter has never been a place that is large enough or where the as were targeted enough to be appealing for political related advertising. and so dorsey, look, give him credit for taking a position and sticking to it, but it's also true that it's easier to take
that kind of stand when the advertising and he's talking about is relatively insignificant on twitter. taylor: shira, you write a bloomberg opinion column in you get hundreds of comments an e-mail's coming in. using that as a sample data, who was right here? shira: i don't think my comments are necessarily representative, but i do feel like that facebook is in this cycle where nothing they do is right. there is a little bit of truth to that but it's also true that look, they're a place that has an audience of a couple billion people plus on a daily basis. and the choices that they make has an extremely large impact both on what people see, who gets seen, whose voice gets heard, and that's why there's so much tension on the policy choices that facebook makes and on how they write their algorithms. the choices of one company controlled almost entirely by one man are so important in the discourse of the country in the
world. taylor: shira, you write a very obvious question that i have failed to ask up until this point, which is, how did google manage to stay out of all of this? shira: i don't know. to me, this is one of the great mysteries of advertising, online advertising controversies the last few years is that google has managed to stay out of the fray. google is the largest advertising seller in the world. they somehow, while mark zuckerberg is taken these visible stance on free speech and gotten criticized by everybody, from the president on down for how they handled political candidates and their advertisements on facebook, google has said nothing as far
as i can see, and they haven't really been called to account. i can't imagine it will stay that way, but have just let mark zuckerberg take the fire. taylor: i want to jump over to another big tech giant that has been reporting, that was apple, yesterday. and apple created new ways to boost up those juicy iphone sales. during an earnings call, executives put aside the typical praise of design and technology, and instead they talked about installment plans, trading programs, and giveaways. iphone sales fell in the latest quarter, but overall revenue rose. how are they doing this, sort of juicing up sales with other products and other plans? >> yeah, in a world where iphone sales, revenue from iphones is going down 9%. the fact that they're growing overall when their products aren't as hot as they used to be, clearly they're doing something right. people are out there buying
apple watches, people out there paying them for online services. and if they can continue to do that, if they can continue to keep moving things forward, the question is, why do investors care? why don't they just get behind this? taylor: ian, what is the plan that stood out to you the most? is it trading and phones for value? is it talking on apple tv if you purchase a new device? what did executives on the call feel was the most significant to boosting the extra revenue? ian: the answer is cook was basically asked, what are you going to do? it was more a case of, we're going to be flexible. we're going to do things in a region-specific way. china was helping them there. price sensitivity was his way of saying we're not going to charge as much money for the prices. he expressed a more flexible approach, when they talked about the supremacy of their products and the value of what they offer
in terms of the physical entity. very, very flexible, and to an extent, that's working. your take on this new flux ability of apple. shira: i think it's very smart of them and it's compared to like apple is a duck from the top, from the surface, it looks placid and calm, but underneath they're having to kick like crazy to stay gliding. this is a company that's going to have to work a lot harder to grow at rates that would have been really disappointing two or three years ago. what they're doing with installment plans, basically effective discounts, through trade-ins of older devices and things like that, it makes all the sense in the world. they could get even more aggressive on price if what they're really interested in is getting devices into the hands of more people, new or devices in the hands of more people,
and then trying to sell them on things like music subscriptions, more apps, video games, things like that. i'm very curious to see when their service launches on friday, how apple is going to promote that to the billion people or so who own iphones and other apple devices. taylor: and you heard about that apple tv, ian, and it's sort of tricky because if you buy a new advice, you get a new tv. tim cook said he wants to get more people on the tv platform but they are hooked on this new device. describedly, it was as a gift to the fan base, if you like. we talked about how wonderful the content was, but at the same time, underpinning that. we like it and we want them to like it. he's created an audience. he's not selling devices.
he's basically doing audience cure ration. -- curation. that plays into the service model. if you're an investor, services have twice the gross margin of apple's hardware. taylor: and shira, talk about that strategy as well, with the apple card. that was also a similar strategy, where not only are they getting people to take out -- or purchase or apply for an apple card, you're also getting a product. shira: yeah, it's another way to effectively discount the price of the new iphone. the apple card thing, put in perspective, in a place like the u.s., the vast majority are so full by the telephone carriers, by verizon, at&t, and others, so what apple is doing with things like the card discount or installment plans, those are only -- apple can best control the phones that it sells itself, and that's always going to be a
fraction of the prices sold in the united states. taylor: bloomberg's ian king and bloomberg opinion's shira ovide, thank you both for joining. interest stocks reported avenues that missed analyst estimates. shares fell as much as 20% to a level just above the company's april ipo price of $19 a share. third-quarter revenue posted nearly $280 million, and that compared with analyst estimates of $282 million. and coming up, bloomberg's new survey shows while the model to -- model three struggles for service, the battery is like no other. we break down the numbers, next. and if you like bloomberg news, check us out on the radio. you can listen on the bloomberg radio app, or in the u.s. on sirius xm. this is bloomberg. ♪
taylor: it is the biggest survey of tesla drivers ever conducted. bloomberg pulled almost 5000 -- polled almost 5000 model 3 owners with a questionnaire. the data reveals many of tesla's troubles are coming from the repair shop. here for more is david welch. is service improving or not? david: it is, but it still has a way to go. we look at the survey results, first of all the number of complaints have come way down as the quality of the vehicles has gotten better. but it's still taking too much time in the opinion of customers for tesla to come out and make repairs for vehicles, particularly after there's an accident. the reason is because they've been going sales of the model three very rapidly. we've seen this with audi
recently. they were growing sales a decade ago, gangbusters in the u.s., the dealers couldn't getting of service techs hired to meet all the demands for warranty work, basic repairs, and services. and in tesla's case, they actually sent people out to do some of this work. so it's hard to keep up with it and tesla is having a tough time with it. getting better, but still not there. taylor: what is the problem? is it a supply chain issue? they can't train their employees fast enough with the technology, for example? what's the real issue? david: it's kind of all of the above. we have many more cars and owners out there. it's getting more difficult to get people to service them. that's one part of being a big car company that really gives companies like general motors or toyota or volkswagen, with an advantage like a company like
tesla, with a big upstart, it's very easy for them to take care of these sorts of things. tesla's still building that out. in some states, they're really still getting the whole sales and service operation in place. the car itself is still relatively new to the market, so they're still working bugs out. common complaints are things like scratches, it comes down to basic craftsmanship of building a car. that's still improving, when models are new, they're often having these issues. many of many were vehicles out there have a lot of those problems, and they're just catching up to the fact that they're becoming a regular car company now. taylor: it's interesting that this is on the rise. you've covered all of the auto sector. it's in your company, how much of it's an expectation that these kinks will be worked out eventually? david: there's always an
expectation issue. tesla has a bit of an advantage here in that whenever they've had quality issues, there has been a lot more tolerance from the customers, because tesla owners like the electric drive, they like the touchscreens, the technology in the vehicle, so they're pretty forgiving when there are small glitches or snafus when it comes down to snafus when it comes down to quality. so, there is an issue where -- their customers tend to be pretty tolerant, but it's an issue of bringing up the infrastructure and getting enough people to fix them. taylor: david, as we know, with tesla, it's all about the battery. someone said, "charging my tesla at home means i never have to think about it," and other people complain there aren't enough superchargers nearby, even though those have been promised. what's the take on the battery? david: so, the battery itself, people have not had problems so much with the battery.
by far more, there were more -- were complaints about the craftsmanship issues. when it comes to charging, people out on the road need a supercharger that they can get access to wherever they are. and this is true for all electric vehicles, really. the whole world of supercharging is kind of building itself out as we see more vehicles, more electric cars purchased across the country. so the field of chargers always seems to be a little bit behind the population of electric cars back there, and that's probably true forttle bit tesla, at least according to the survey it says. people are happy when they can charge the car at home and not worry about it, but people putting more miles on the car and need a charge out there, there's an electric station on every corner, you have to wait for one. it makes a little bit more difficult.
taylor: meanwhile, we wait for part three of this amazing 5000-people survey that comes out tuesday, november 5. thank you. that was bloomberg's david welch. and coming up, raging fires, black-outs, superstorms, and more -- all this and more threats to the power grid that keep the world going. what the solution might be to stay in charge. that's next. this is bloomberg. ♪
taylor: california power companies say that blackouts to limit wildfires will end friday. pg&e has restored power to nearly 330,000 customers, but extreme weather events can leave people without access to cell networks and the internet. according to the fcc, 17% of cell towers in sonoma county were down on wednesday. so, what can be done to preserve utility grids from the effects of climate change? our next guest is working on that very question. it is ashley phillipson, and she is the project leader for grid resilience and intelligence
platform, aka grip, over at stanford university, using ai to redistribute power to necessary systems during say, a superstorm. ashley, great to have you. you're in year two of three of this project. what have been some of the major challenges you're confronting? ashley: yeah, so unfortunately, firefighters here on the west coast have become pretty regular, just like the seasons. same thing on the east coast, we're having regular hurricanes that are increasing in power, and we have to learn how to deal with these. how can we have a more flexible, adaptable grid? the grid infrastructure is the best with that in the u.s. so trying to figure out ways to essentially have new tools and solutions in our toolbox, like ai, machine learning that can absorb and recover from these events. that's what we're trying to do with grip.
taylor: so walk me through some of the solutions you've found so far. ashley: right, so basically, we look at wildfires, ice storms in vermont, wildfires in the west coast, and we're looking at things like predictive analytics. how can we look at actually figuring out where crews should be placed in advance of a wind event? in our absorption use case, we're using a method that uses machine learning to figure out, how can we do power balancing with water heaters, solar inverters, electric vehicles, that actually allow us to have a more flexible grid to observe these events? taylor: i love how you talk about solar inverters, because when you shut off the power, you can have a solar panel. does a solar panel run on battery, the batteries are $10,000, and are also connected to the grid. when do we start to see the solar power become a solution instead of also tied to the grid? ashley: absolutely, so we're
trying to really capture value from distributed energy resources and being able to -- being connected to the main source of the grid, but also being able to, in terms of -- times of outages and all these kinds of grid events, being able to still have the lights on and keep the mission critical appliances running. things like hospitals, for example, nursing homes, you want to be able to utilize batteries, even electric vehicles, essentially. there's a lot of opportunity to tap into these kinds of solutions. taylor: how is this -- i'm thinking of edison, pg&e, they don't have access to technological upgrades or upgrading the infrastructure is too expensive, how much of that is also coming into play here? ashley: absolutely. so, with grip, we've told different utilities and co-ops who are advisory members to this project, because exactly, they're interested in the work we're doing and they realize any to integrate some of these
solutions into their business plan. they're trying to also learn as we're doing this research how they can integrate that and utilize this, as well. taylor: this is a technology show, supported much every day i hear the word ai being thrown around. how are you using ai to help? ashley: a perfect example is using image recognition. a lot of utilities and co-ops are using drones to actually be able to run the wires, take photos of distribution poles, and identify, are they tilting one way, is it vegetation growth, could that be a fire hazard? and being able to monitor that in addition to human crews. creating more efficiency. taylor: if that is not a phd student, i don't know what is. ashley of grip, thank you so much for joining. facebook is doubling down on its decision not to ban political ads despite criticism. we hear from facebook's coo, sheryl sandberg, next. this is bloomberg. ♪ when it comes to using data,
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♪ taylor: this is "bloomberg technology." i'm taylor riggs in for emily chang in san francisco. now, facebook has seen its share of recent rain clouds with antitrust issues, cryptocurrency pushback, and data breaches hanging over his head. one of the most controversial stances was recently announced by ceo mark zuckerberg, who said facebook will not ban political ads, even though they're known to be false. in an exclusive interview after the company posted earnings, caroline hyde got perspective from facebook coo sheryl sandberg. >> we're not doing it because of
the money. this is less than 1% of our revenue and revenue is not worth the controversy. but what mark said is we believe in free expression. we believe in political speech, and ads can be part of that. i think where we are leading is on transparency. we put out an ad library, we announced a presidential ads tracker, and that kind of transparency we think is really important to people understanding. you also talked about investing in protection. one of the things we talked about on our earnings call just now is the size of the investments we're making, prepared for 2020, working with election commissions all over the world, hiring engineers, using machines, using human reviewers, really doing what we can to make sure people are kept safe. carolyn: so when twitter decides to go the opposite direction, does that make you question your
decision or do you stand by the fundamental reasoning? sheryl: well, mark just said on the call that we've thought about this for years and certainly we've been thinking about it now and we fundamentally believe political ads are an important part of the dialogue and can be important against incumbents, important for new views, but we also believe free expression across the board is something we stand for as a company, and people all over the world are using that. certainly, politicians are using that. but people are using it, and that's how you see our growth continuing. caroline: it's going to be a tough year in terms of regulatory scrutiny. do you worry about talk of the business model being under attack? how do you see your role in educating particularly those on capitol hill about it? sheryl: well, i think we really have to help people understand that targeted ads and privacy are not at odds. we can do both. so, if you're an advertiser, you
are the biggest company in the world or the smallest company, and we have 7 million advertisers using our services. and you want to show an ad to women in their 50's -- that's me -- who live in california, we take the ad, show it to that person, give you back aggregated results. we can do very good ads we can do very good ads targeting that really makes ads good for people and really helps advertisers reach the right person without violating privacy, and that's something i think we need to do a much better job of explaining. taylor: that was facebook coo sheryl sandberg. and more on facebook and antitrust uncertainty, mark zuckerberg is defending the company's acquisition of instagram in 2012 which critics say facebook did to eliminate an emerging rival. when the headline came out that instagram was the focus of an antitrust probe, is that what he is hearing from regulators?
guest: it must be because he kind of volunteer that information a little but on the earnings call yesterday, talked about the acquisition of instagram and how that's going to be discussed at lot it sounds like in the near future. he brought up, to your point, their view on this, which is that it wasn't a direct competitor but complementary to what they were building. he did not see it as directly competing with the news feed at the time, and it's kind of a valid argument because instagram was at the time very small. facebook is painting a picture that instagram only became the behemoth we know today because of facebook's help. we will never know the actual answer to what instagram could have become on its own, but i think that's going to be their pitch and that's going to be there framing going forward. taylor: we talk about instagram's strength relative to facebook, but the antitrust scrutiny around eyeballs, around advertising, and what would happen if you split those two apart.
kurt: it's hard to even fathom because most of instagram's business is built on facebook technology. if you're an advertiser on instagram's platform, you're using the same platform, the same technology to send and purchase ads on instagram, too. in some ways, instagram would in theory have to build that all from scratch if they were to be broken up. at the same time, they have the audience there. people already know, advertisers understand the appeal of instagram, so it wouldn't have to do a lot of selling, but it would create a technical challenge of if you were to split them up, how would that work because they use the same infrastructure. taylor: we just heard from sheryl sandberg, the coo of facebook, continuing to defend their rules about doing political ads, regardless if they're true or not. what's your take? kurt: well, i actually wrote a few weeks ago facebook should do
away with political ads, simply because of the headache. she mentioned these are not a big part of facebook's business. i think it's 1% of revenue. think of the drama they've had to deal with than just the last few weeks and we're still a year away from the actual election. my argument was that it's not worth the headache for that 1% of revenue, and i think twitter kind of proved that point when they came out yesterday and said we're going to get rid of political ads, and it's a very small part of their business, too, and i think they decided it's not worth dealing with all of this if they're not going to make money from it. taylor: we're also getting news zuckerberg will be meeting with political rights groups to talk about their political ad worries, including al sharpton, having to meet with these leaders can help, but also how much of a distraction is it? well, when i saw twitters news yesterday, my first reaction was i thought this was terrible news for facebook.
i didn't think of it in terms of just twitter exclusively. every single person who is out there thinking facebook's policy is wrong can point to twitter and say, they're doing this, why can you not do that? hillary clinton was tweeting about this. a number of other politicians yesterday kind of took jack dorsey's tweet and spread it out and said, "ok, facebook, it's your turn next," and i think that pressure is the biggest thing. taylor: and coming up, it's one of the biggest things to emerge from the facebook cambridge analytica scandal. brittany kaiser. she talks about her data. that's next. this is bloomberg. ♪
$10 million led by jack dorsey. he was speaking at the blockchain week on thursday. $10 million led by jack dorsey. what are you doing with the money? >> so, we are building an exchange. we've historically run token sales. we've done primary offerings. today, we're expanding that to secondary trading. historically, when you've run these primary sales, you've got these tokens afterwards. you need to move them to exchange to trade them afterwards. imagine if you bought shares in an ipo and had to move them onto an exchange to trade them after and go through a whole process. it doesn't make any sense. we're changing that. taylor: i was chuckling a little bit because you said you are compliant. in this world, what does compliant mean? andy: compliant means a lot of things and there are a lot of agencies with a stake in these matters.
all these different agencies are making sure you are abiding by whatever rules they are. we are trading cryptocurrencies, nonsecurity assets. you've got to be compliant with whatever regulators are looking at that. we look at what they're doing and have to be careful about those issues. taylor: when we talk about being compliant, i would be remiss if i did not bring up libra. what are your thoughts on libra? andy: libra, i think, is a great thing for the industry. facebook has more reach than almost anyone else in the world and they will expose a lot of consumers to the idea of cryptocurrency. once that happens, it's an open market and people compete for market share with libra. i think there are upsides and downsides to the details of libra's design, but at the end of the day, they will expose a lot of people to the industry and that's something we're excited about. taylor: you talked about you have been working with regulators to get compliance.
libra clearly has struggled to get people on board. how has it shifted? andy: well, one thing you have to look at is facebook is not looked at kindly for a variety of reasons, privacy issues included. some of the pushback libra is getting is not actually specific to libra projects but more about the issues facebook has had historically and how that might impact it. but there is good news, and this has gone largely unnoticed. in the past couple of weeks, a commissioner from the sec has started talking in public speeches about the idea of safe harbor for crypto tokens, meaning you might be able to carve out certain crypto tokens with certain attributes from security flaws and allow them to be traded more freely. that's something really exciting. we're far from conclusion on that, but she's at least talked about it. taylor: you think because we are talking about it more, despite negative headlines on libra, it's good for the industry? andy: i think at the end of the day, they will find a way to launch libra. they may have to get over some unexpected speed bumps, but it will reach millions, maybe more
people, and that will be good thing for crypto as a whole. taylor: funding environment, a private company. we talk a lot about private companies, particularly wework. how they have changed the funding environment as we know it. how is the funding environment now more difficult than let's say a year or two years ago? andy: there's a lot more scrutiny around business models. i think for a long time, we were looking at this ecosystem of growth at all costs. and you can grow in all economies. today, especially in light of the wework news, investors are looking at business models. can you actually make money with this business? and that's what we're focused on the crypto industry, more than any industry out there, it has winter, spring, and you have to be able to survive that. a real business model generates real revenue, and it has been really important. taylor: did your investors this time around really want to see that path to profitability? andy: polly chain was already an
investor in that. we had a lot of investors that had been with us from the beginning and that's why they re-upped their stake and got involved. taylor: the facebook cambridge analytica scandal of 2018 raised our alarm about data privacy. and now brittany kaiser has a new role and mission. our own caroline hyde sat down with her to discuss the controversy around personal data in new york. brittany: so, since becoming a whistleblower, i have got to explain to people how important their data is. it's more valuable than oil and gas. and on a day to day basis, it's being taken by companies all around the world making a multi trillion dollar industry off of your most private information. now, that sounds a little gloom and doom when people think they can't get their privacy back, but the truth is people have agency. there's a lot of things we can do on a day-to-day basis to
protect ourselves, and legislators and regulators are finally listening. there are fantastic laws that have been introduced to the u.s. congress and across different states, not only to protect us ahead of the next election but can make sure we live a more ethical digital life from here forward. carolyn: what kind of legislation at the moment? we've seen california pass laws. gpr is something facebook itself has pointed towards. where do you think legislation is leading the way? brittany: i think gdpr recognizes your data is your property. if they want to continue to use it, you need to opt into that. transparency is the most important part of the conversation, which is why i'm really excited that california has implemented a version of gdpr that's going to come into
effect in january. also, governor gavin newsom, in the state of california, has introduced something called the data dividend law, which means not only to companies need to tell you what they hold on you but how much money they're making from your data and get a cut on that. right now, everyone in america is pre-opted in to your data being available, which is the opposite in europe. you are opted out and you have to consent. mark warner has a package of legislation that demands everything from transparency and consent to how your data is collected to banning negative use cases of your data that push -- and malicious use cases of your algorithm that pushes hatred and vitriol to the top of your newsfeed in social media. caroline: we're also seeing the companies themselves react in many ways. facebook announcing that they are having more third-party fact checking, employing more people.
what do you think about the steps being taken by the companies themselves? and whether they go far enough. brittany: i think that the investment facebook is making it to stop and foreign intervention in our elections is important and direly needed. unfortunately, we didn't have those protections in 2014 and 2016. unfortunately, what facebook is not recognizing is the greatest threat to our democracy is domestic. our politicians are allowed to say whatever they want. not give the same community standards you and i have to abide to. it's not only a massive threat but will continue the problems we saw in 2016, where everything from incitement to violence, racial hatred, sexism, and voter suppression tactics were used by the trump campaign and aided by facebook.
carolyn: the fact that facebook's employees, some of them have written a letter. do you think that might change? do you expect that to change? brittany: i do expect that demanding changes the only way we will get anywhere, if it's facebook employees or regular citizens. i tell people every day to call your legislator. i speak with legislators every day who say they've never heard from constituents that they care about data rights. that is a big problem. because if we, in droves, contact our legislators, they're legally required to do something about it. taylor: and still ahead, facebook revenue growth contributed to solid third-quarter earnings. not impacting the report -- regulation and libra, for now. we talk to an analyst about the numbers next. this is bloomberg. ♪
taylor: now let's get back to the top story of the day, and it's all about facebook's third-quarter report. it was well received by analysts, but that doesn't mean that regulation woes and crypto doubts won't hurt earnings eventually. mark joins me know. analyst, and all your years covering this, how that markprised you zuckerberg came out and for a lot of the portion was defending his political ad position? mark: well, he owns the company essentially and acts like he owns the company and has been strongly opinionated from the beginning and i respect that. if you own facebook stock, you're in part making a bet on mark zuckerberg and how well he's handled the company, how responsible he's going to be through these crisis moments.
these companies have at crisis moments. there could be another crisis moment in terms of this next election if there's a rumor that starts about there being manipulation, so you're in part making a bet on just how dependable he's going to be going through this. i think he has a pretty good track record. taylor: and then twitter came out, notably at the same time of the earnings, and took an opposite position. who's right here, facebook or twitter? mark: the divide is if you show political advertising on the network. i much prefer the point of view of zuckerberg and twitter -- than dorsey. his point was why don't we show the political ads? it doesn't really matter in terms of the numbers, the revenue numbers, to facebook. it's 0.5% of their revenue. let's show the ads and have complete transparency. there are some ads probably in poor taste. absolutely. they're called attack ads. we've lived with them for decades. let's make it really clear who
is spending the money on those ads, and if senator warren or president trump or somebody who supports those sides or candidate biden -- let's find out who is throwing out really bad, unfair ads. in the past, we've always had at the end of the tv ad, you would hear "sponsored by" or "paid for by." i'm sure there's a way to make it damn obvious it's a political ad and here it is so we can fact check it ourselves. taylor: if anybody can do margins, it's you. they had beat on the operating income, margins, and bottom line. are you worried they're not spending enough to clean up the platform? mark: i think that's such a great question. i think most people would go the other way and think it's great they're not spending enough. they're still expending aggressively next year. they're going to grow their
capex about 15% and their operating expenses about 30%. 30-35%. that's within their guidance. that's good growth. that's what you want to see long-lasting tech franchises do. that's what amazon has done to get to where it is today. that's what google has done. you also found that the trend is decelerating a bit from where it was last year. 2019 was a big spend year. it seems to us they've done a pretty good job improving the stability and durability of the platform. taylor: we also, i think, got more of an indication on where regulators are focused. the company came out and said instagram has been a focus issue because of the antitrust issues. do we now have a clear picture of where these antitrust issues are headed? mark: not really. there's three areas of regulation. there's taxes, privacy, and monopolistic, anticompetitive practices. you know, the instagram acquisition was approved. i think it's very hard to look back on that and say that wasn't
an asset that was tiny at the time that had some nice synergies that developed with core facebook. breaking up facebook and forcing them to spin off instagram, i don't know on what grounds you would do that. and for shareholders, i think it would probably be a negative event. i don't think that's a positive catalyst. taylor: you like the stock. what's the biggest headwind as we enter 2020? mark: i think there are two or three of them. i think at the top of the list, though, is what you've been leading with, which is regulatory risk, and then maybe a competition risk. there's a popular new social media site out there called tictoc. so, it's possible that could start clipping the growth, maybe not of core facebook but of instagram and maybe snapchat, too. taylor: we are not at record high levels yet. what do you see that could take
leg stock to the next higher? do we have to remove that regulatory overhang? mark: probably, or you would have to have new revenue streams cap in next year. i think this is the most attractively priced on a growth adjusted basis. it's rare that companies trade at a discount to their growth rate. i think facebook is the one he -- is 25% earnings grower trading at less than 20% earnings. i mean stock will go up on the multiple going up and on positive earnings revisions. you don't normally get that. when you get it, you should be aggressive on a stock. we are. taylor: you are giving me another education on the little r and the little g, so thank you. that does it for this edition of "bloomberg technology." and "bloomberg technology" is livestreaming on twitter. hnology and betec
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