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tv   Bloomberg Technology  Bloomberg  May 25, 2021 11:00pm-12:00am EDT

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>> from the heart of where innovation, money, and power collide, in silicon valley and beyond, this is "bloomberg technology" with emily chang. ♪ emily: i'm emily chang in san francisco, this is "bloomberg technology." coming up, the washington dc attorney general slaps amazon with an antitrust suit, accusing
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the behemoth of forcing third-party sellers to offer the lowest prices on amazon. sellers tell bloomberg even if they offer a lower price on their own website, the amazon listing gets buried. amazon pushing back hard. we will discuss. video darling vimeo counts amazon and starbucks among its biggest customers, but the provider plunges in its public debut after splitting off from iac. did they get it wrong? i will speak to vimeo's ceo. and it has been one year since the tragic death of george floyd ignited a wave of protests. the biggest companies in the world, including apple, amazon, and facebook vowed to do better. how much has really changed? we will show you how promises haven't necessarily been kept. we will get to that in a moment. let's look at the markets. first stocks climbed for another day this week. walk us through the day. >> it was a pretty quiet day. new south volumes much below that of recent averages.
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that was reflected in the benchmark indexes. the s&p 500 ended a hair lower, about .2%. the nasdaq 100 just into the green. you saw the semiconductor index outperform both, ending about .4% higher. your real winner on the day was the nasdaq golden dragon china index. finishing about 1.8% higher. the real action was in the main stocks. -- the meme stocks, those day trader favorites. gamestop surging over 16% up to its highest level since march. amc had an even better day. up nearly 20%. looks like retail is driving the action. you saw #amcstrong trending all day on twitter. it took gamestop along for the ride. let's bring it back to the real world and end on amazon. it has been a fascinating week for this stock. bloomberg news reported last night the takeover of mgm could
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be announced this week with a $9 billion price tag. that helped shares open higher today, but they were starkly lower on mid-day in new york after breaking news of the antitrust lawsuit. shares did recover to end higher on the day, but this chart tells you it will be a tug-of-war for this stock going forward. emily: katie, thank you so much for the roundup. i want to stick with amazon. now facing a massive antitrust suit. the e-commerce giant is being sued by the attorney general for washington, d.c., who is accusing amazon of anticompetitive practices that have forced prices down on amazon, but raised prices for consumers elsewhere. the suit says these practices have allowed the company to build monopoly power. this is the sixth antitrust case against a major u.s. tech company filed in the last year by state and federal officials. to discuss, we are joined by our
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own senior editor brad stone, who has written a couple of books about amazon. how significant is it? how dangerous could this development be for amazon? brad: obviously, it is significant. an antitrust case by a prominent attorney general with more on the way and scrutiny from the ftc, it is not good. as for the outcome, i think it is a long legal case and complex issue. i think in principle, it is not as bad as it sounds. in reality, it might be worse, and by that i mean the charge against amazon. years ago, amazon gave up this idea of price parity, forcing sellers to give the lowest price. it still implements that in a very subtle way, in the search engine. a lot of retailers do this. for third-party sellers, it is kind of an invisible tribunal of offering a price for sale lower somewhere else, if some merchandise gets in the wrong hands and offered for sale
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lower, amazon will disappear them and there is no recourse. i think the fact set looks bad for amazon, it probably sticks adjustments onto their business model. emily: the other big cases that have been filed against tech companies, google, facebook, how concerned should investors be about this for amazon in particular? michael: we will have to see what the facts actually tell us. brad said it right, most favored nations clauses are really common. medicare has one for drug prices. you can't offer anything lower elsewhere than you offer to medicare as a buyer. so amazon is essentially following that practice. if in fact it is draconian and they say if somebody takes my vendor's product and discounts it to a third-party unrelated to amazon, that could be overreaching. i doubt that will happen. brad is right, it is a minor fix. i think the suit is going
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nowhere. the fact is the antitrust laws were written 100 years ago. they just never contemplated anything like e-commerce. so unless congress gets its act together and changes the law, i think amazon skates. i think there is no risk. i don't think investors are going to be worried. you can put much count on our congress not agreeing on anything. emily: i just want to mention what amazon has said, the d.c. attorney general has it exactly backwards. sellers that their own prices for the product they offer in the store, like any store, we reserve the right not to highlight offers to customers that are not priced competitively. so that speaks to both of your points. however, in terms of what is happening in practice, how much that might differ from what is on paper? brad: that is a good point. amazon is saying sellers set
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their own price, but by virtue of this very soft, very opaque most favorite nation or price parity clause, is amazon in a de facto way requiring sellers to set an absolute minimum price? and to perhaps raise prices elsewhere? that is the argument here, a tough one to back into. i think the original purpose of antitrust law was to lower price and maintain low prices for customers, and not ensure -- not allow monopolists to raise prices artificially. on its face, that is what amazon is doing. it is kind of a backwards argument. i tend to agree with michael, at least in this case, on the face with amazon's defense. emily: we will be speaking with the washington, d.c. attorney general at the bottom of the hour. so i will tell him what you said, that you think the case is going nowhere and amazon skates away.
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what questions do you have for the attorney general if that is what you believe? michael: it is a problem of proof. he will have to show damage. he will have to actually get a vendor to come forward and say "i wanted to charge $40 on amazon, $30 elsewhere, because of amazon, i had to raise the price elsewhere." that is not what happened, they had to drop the price to $30 on amazon. if you can find the vendor who said they raised the price elsewhere because amazon made me, maybe he's got a case. i doubt that smoking gun exists. i can't even imagine if it exists. emily: meantime, we are potentially hours away from amazon's biggest acquisition since whole foods. we are all expecting amazon will be buying mgm studios in a massive acquisition. if this happens, do you think it is a good move for amazon? given the backdrop of the scrutiny?
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michael: i do. there is certainly no antitrust issue with them owning a film library or studio. they are just not big enough to make a meaningful difference. people can quibble over whether 17,000 hours of television content and 4000 films worth $9 billion, $4 billion dollars, or something less, but it is about a week's worth of revenue for amazon, so who cares? it is not really a big deal. considering it will be advertised over the next 20 years, amazon is buying 90 years worth of content, and it will take them 90 years to build a library that big. they have to compete with peacock, the nbc universal library, and disney plus, with disney and fox's library, and hbo, with warner bros.'s library. they cannot compete with those services if they do not have a library of their own. i think the loser is netflix. they don't have a deep library. amazon just locked up more content that was not locked up by the other big services. emily: what is your take on that?
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you chronicle in your book how amazon studios, the original programming got off to a slow start, they did not necessarily know how to negotiate in hollywood. they had some executive problems at the company. now we are seeing bezos spending big. he has over the last years been willing to spend. what do you make of this? brad: it is interesting. in the beginning, there was only kind of an intuition of how they might monetize original content or license content. what has really developed are business models to exploit the kind of content library they will be getting from mgm. it is not just making content the centerpiece of the prime subscription club, but it is also the growth of amazon's ad business. we have seen the growth of imdb tv, which people may not know a lot about, but it is this free
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streaming service juggernaut that is growing quickly. you put mgm's library in there, and you monetize it. as well as getting franchise potential that amazon has lacked. so all sorts of spinoff potential in the "rocky" franchise or "james bond" franchise if amazon can get the rights to that from the family that controls the franchise. but that is in part what they are buying, opportunities, creative opportunities based on the property mgm has. emily: we shall see. we are following the deal closely. as i said, i will be speaking with the washington, d.c. attorney general at the bottom of the hour. lots of important, essentially pointed questions for him, given the conversation there. don't miss that coming up in a few minutes. up next, breaking up may be hard to do. shares of video software company vimeo slumping in its trading debut after going it alone. we will hear from the vimeo ceo
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next about her strategy for the company ahead. this is bloomberg. ♪
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emily: welcome back to "bloomberg technology." i am emily chang in san francisco. shares of the video platform company vimeo slumping in its trading debut after spinning off from iac. like match before it, vimeo is the latest company to part ways with iac. i spoke earlier with vimeo's ceo anjali sud, who credited the iac chair for much of the video creation company's success. she also maintains she is not concerned with the share price dip. >> we are not worried about the stock right now. we think about the market and this business in decades, not years. we are just getting started. we have great momentum in revenue, profitability, margins. most importantly, we are building. we launched new features last week. we will continue doing that. we see demand from businesses for video continuing to be high. we feel we are coming into this
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from a position of strength, and we are energized. the focus will be on building value for our customers and ensuring they are successful with video. emily: years ago, vimeo had dreams of taking on netflix in original programming. it was not working out. you had the idea to give video software tools to businesses to pivot to the enterprise. q pitched that to the ceo of iac, he said yes, and that has taken off. but perhaps investors wonder about the next phase of growth, how big can this idea really be? how do you answer that? >> our next phase of growth is fulfilling the mission myself and our team set out to do in 2017. the reason it is such a long-term opportunity is the market, if you think of it as every business in the world, there are hundreds of millions of businesses small and large, a vast majority are not using good
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-- professional quality video today. if you think about all the ways we communicate at work, email, chat, marketing, social media, image, text, video should be a first-class citizen. it is not, because it is so hard. we look at our market, we have 1.5 million customers. that is a tiny sliver of the market. so we think there is plenty of runway and growth for vimeo. not just for quarters and years, but decades. just given the power of video, and the fact it should be used by every business in the world. emily: being in the video business myself, i can understand that. it is hard. and yet videos available on nearly every social platform, youtube has big ambitions in this space. how do you see the competition -- the competition is giving away these tools for free? >> in many ways, we don't think of youtube, facebook, and others as competitors. they are partners. ultimately, a business wants to be able to get their message out
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on facebook and youtube and twitter and linkedin. they don't want to choose. they don't want to create content for each platform and upload to each platform. vimeo enables you to create content and distribute it everywhere. so we are actually a valuable partner. we are partnering with all of those platforms today. we have a creation app that actually helps businesses make content for those platforms. they like it too, because we are helping businesses put video out there. these platforms know video performs better than image and text. it is more engaging, it gets prioritized in newsfeeds, so it is a good thing for the ecosystem overall. for vimeo, it is important, because it enables us to serve businesses in a way that is quite differentiated. emily: vimeo did not turn out how barry miller intended, but i understand he's happy with the results. how involved has he been, and how involved will he continue to be?
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>> barry has been an incredible champion of vimeo over the years. i think the role he has played is really one in encouraging us to think long-term always, have a forever timeline. to be bold and remember not to get distracted by the noise of a quarter or a stock price, but really are we building lasting, enduring value for our company? -- for our customers? that is the ethos he has brought, and it is one i will be carrying on in the future very much. emily: video platforms have long struggled with misinformation and hate. it is something companies as big as facebook and youtube have not gotten a handle on, despite having massive resources. what is your strategy, and how do you intend to meet that challenge? >> we take our responsibility as a platform in ensuring we have a safe and supportive environment
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and community very seriously. we invest in our trust and safety efforts, content moderation efforts. we are always evolving. we are always looking at guidelines and making sure they reflect the realities of our world, because it is constantly changing. that said, the reality for vimeo is we are more oriented to businesses, professional content. so the risk for us, or the volume or issues you would see on other platforms doesn't -- tends to not exist. more and more, we are helping people get their content onto other platforms, versus on vimeo itself. i think it is expected to be less of a feature for us the way it is for a social media platform, but nonetheless one we take very seriously and will always commit to be responsible on. emily: anjali sud there, you can catch the full interview at coming up, the microsoft annual developer conference kicking off. highlights for the products for developers. amanda silver is coming up next. moderna rallied on news the
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covid-19 vaccine was found to be 93% to 100% effective in 12 to 17-year-olds in a large study. the company is expected to submit for regulatory approval in june. earlier this month the fda expanded the use of pfizer vaccines to include teenagers 12 years and up. this is bloomberg. ♪
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emily: it is day one of microsoft's annual developer conference. ceo satya nadella kicking off the event in a keynote describing how digital transformation and the tech industry will evolve by the year 2030. satya: tech as a total percentage of gdp will double from 5% to 10%. but the most notable thing is what will happen to the other
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90%. the digital transformation projected to happen over the next 10 years is happening today. emily: joining me to discuss how microsoft is shaping that future is microsoft's cbp, amanda silver. data from linkedin shows nearly 150 million new tech jobs will be created over the next five years. 98 million alone over the next five years. how does this present a challenge and opportunity for microsoft? amanda: that is a great question. microsoft has always been working towards developers. we are a platform company at our core. we want to make sure we are empowering developers all over the planet to help businesses and organizations transform. emily: talk about what this means for developers. you are releasing new tools that will help them create. talk to us about what the intention is. amanda: our intention always is
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to make sure every keystroke matters. for developers, what matters is the code they are trying to write. at the end of the day, they are delivering for their end users. either for customers or employees. we really want to make sure they can create applications more quickly and easily, and deliver it to their end-users as quickly as possible. as an example of the kinds of things we were talking about today, teams has grown dramatically over the past year. it has doubled over the past year. we have over 145 million daily users of microsoft teams. that means it has become central to the way everybody is doing work in this hybrid work environment. so a lot of developers are seeing this as an opportunity to deploy applications for employees to be able to complete their work. emily: there is the talk of the developer shortage. i wonder why that is, and how microsoft proposes to close the gap? amanda: when i think about
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closing the developer shortage, it is about minting new developers, bringing more developers into the workforce, making sure those developers can be more productive, and scaling by working with others, collaborating with others. when i think about things like students learning new tech skills, we want to bring more students to be able to create with technology. as an example, i'm inspired by students in the imagine cup who have been challenged by remote learning. they want to make sure students who want to learn how to build robotics can actually access hands-on labs with remote hands-on labs environments. they used microsoft azure, visual studio to create such an environment. emily: we will be following build this week as it kicks off. amanda silver, thank you for joining us. coming up, we will speak with the attorney general of washington, d.c., who is accusing amazon of
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anti-competitive practices. stay with us. you don't want to miss it. this is bloomberg. ♪ we know how much you count on us...
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emily: welcome back to "bloomberg technology." i am emily chang in san francisco. let's get back to the markets, where it has been another volatile day for crypto. ed ludlow has the latest. walk us through the ups and downs. ed: price swings, bitcoin the focus, falling below $38,000 on tuesday. other coins also seeing downward momentum, except for one, which i want to focus in on. it is when we talk about less, ethereum classic. it was up 14% on tuesday, above
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$75. it continues the upward trajectory into the next session. it is the biggest move of the cryptocurrencies bloomberg tracks. back to bitcoin, you think about bitcoin and the discussions we have had over the last 14 days or so, ultimately, bitcoin is down significantly. since that volatility entered the market. come into my bloomberg terminal and look at this chart. 30 day volatility for bitcoin is at its highest level so far in 2021. but it is nowhere near the level it was last year or the year before, or in 2012 or 2013. so it is all relative. yes, volatility is higher in recent days, but historically, is not where it was. it is not just the cryptocurrencies themselves, i want to look at the stocks relating to cryptocurrencies. probably speaking on tuesday, crypto stocks were down, apart from one, coinbase. it was up almost 8%. jp morgan initiated coverage
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of coinbase with a price target of $371. we currently are at $242. they say the crypto markets are durable and growing, which is positive for coinbase and coinbase has an influential position in cryptocurrencies. so a positive in what was pretty much a sea of red for crypto. emily: thank you. i want to get back to the big story of the day, e-commerce giant amazon being sued by the attorney general for washington, d.c. allegations of anticompetitive behavior. this opens a new front in the campaign against major u.s. tech companies. it is the sixth such case filed in the last year by state and federal officials, but the third -- but the first against amazon. we are joined by attorney general karl racine himself. attorney general, thank you for joining us on a big day. we were having a conversation about this suit earlier in the show. some of the critics saying what you are accusing amazon of doing is what all retailers do.
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what do you find so problematic about amazon's behavior, in particular? >> to be sure, those are criticisms we expected, but when you focus on amazon, and the amazon digital mall, what you are talking about is a player that owns at least 50% of the marketplace. there are estimates that go up to amazon having 75% of market power. the other players, ebay, apple, walmart, if you aggregate and add that up, probably about 12% or 13%. amazon dominates the online space. here is what they use their power to do to third party sellers. they require sellers first to pay amazon a very significant commission, upwards of 40%, for a good. then it requires the sellers to
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not provide access to their product on any other site, including the seller's own site, for a price lower than that which they sell it on amazon. that means you and i are locked into buying a good at an artificially high price set by amazon. that is the wrong our lawsuit seeks to make right. emily: amazon, not surprisingly, has pushed back hard. amazon through a spokesperson saying the d.c. attorney general has it exactly backwards. sellers set their own prices for the products they offer in our store. like any store, we reserve the right not to highlight offers to customers that are not priced competitively. what is your response? >> in theory, that is not incorrect. in practice, the monopoly power,
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amazon tells you what to set the price at, and punishes you if you do not adhere to those rules. that is, in our view, an abuse of marketing power. so the idea that amazon is this the deficit -- this beneficent player on a digital mall that is not rewarding and punishing others, if you don't play according to their rules, is false. third party sellers know that, and consumers are harmed. emily: what states did you work with to investigate amazon? >> this is a d.c. case, d.c. attorneys in our counsel worked on it for over a year. we engaged with amazon as best as we could to establish a cooperative relationship, to gather documents and analyze the case. at the end of the day, we felt the case needed to be brought. it is not uncommon, as your question suggests, for other attorneys general to join
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together in a lawsuit. that may happen, or it may not. we are very confident in our case. emily: that leads me to my next question. why did you file this action in local court versus collaborating with other states before doing this? >> i think that is a fair question. again, we welcome any state to review our complaint. they know how to reach me and my team. we will bring them in on the case if they are interested in this theory. we brought the suit because we believe amazon is exercising its clear monopoly power on the digital mall in a way that punishes third party sellers and hurts consumers by leaving consumers with no choice but to pay higher prices for good. amazon never in its press release takes on or even acknowledges the provisions at
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issue in our lawsuit, sometimes called most favored nation clauses. i would ask amazon to tell you the truth, it is about their most favored nation clauses. emily: have you heard from any other state's attorney generals? >> i will keep that to myself, one but i have talked to more than three attorneys general today. emily: had to ask. are there other antitrust issues surrounding amazon's behavior that you feel deserves scrutiny? >> i think the press and your station has been all over this, with respect to amazon and the larger platforms. these are incredible businesses. i don't mean to denigrate them. they brought incredible efficiency and convenience to the marketplace. but they do not get to set the marketplace by virtue of their own power. i know there are several other
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issues attorneys general are looking at with respect to the platforms, including amazon. emily: earlier, and i want to give you a chance to respond, an analyst who covers amazon says he thinks the case is going nowhere, and amazon will skate away. how do you respond? >> i did not really understand or see in the comment what his rationale was for his statement. if he is saying amazon is a massive business that will likely continue to prosper, i would agree with him. if he is saying these most favored nation clauses are legal and amazon will forcefully defend that, i think it is wrong. i think they are illegal, and where amazon has been tested on these kinds of clauses in their third-party seller contracts, they have backed away. i think that is what they will eventually be forced to do, or choose to do.
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emily: i would love for you to sum up how you came to understand amazon's power in this area. what got you to the point of taking action and thinking this should be a priority? >> it is a very complex issue. antitrust law itself is somewhat esoteric. what we did as a team in d.c. is we dug in to try and understand the third-party seller experience and the kind of pressure placed on third parties who understandably want their goods to be showcased on the biggest digital mall in the world. we then took a hard look at the economics involved. what we saw was third-party sellers were essentially forced to pay a high commission to have goods sold on amazon, then
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strongly discouraged to not allow for their goods to be available at any lower price for fear of being punished and banned from the amazon website. that is very strong and pernicious power, and that is why we acted. emily: attorney general karl racine, big move from you today. thank you for taking the time to explain it to us. we will keep following this case. coming up, companies across the country pledged to focus diversity and inclusion in the wake of george floyd's death, but did big tech keep its promise? we will discuss. this is bloomberg. ♪
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emily: it has been one year since the death of george floyd galvanized protests against racial injustice. the national movement calling for inclusion, equity for all, prompted hundreds of the largest companies to pledge changes in their business operations to support racial equality. at the start of the year, apple announced a set of major new products as part of its $100 million racial injustice equity initiative. facebook promising to support suppliers and communities that were black-owned in the u.s. as of september 2020, the amazon community invested $27 million to different organizations, including the black employee network mode which they helped select. according to a study by creative investment research, while u.s. companies pledged $15 billion toward racial equity following floyd's murder, only $250 million has actually been spent.
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for more, i want to bring in dr. evelyn carter. paradigm is a diversity of equity, and inclusion strategy firm that designs data-driven strategies, and trains employees and leaders for success. thank you for joining us. why this gulf between $15 billion pledged and $250 million spent? explain that. >> it is a big number. i think the biggest reason for that gulf is, one, we are looking at what has happened over the past year. what i always remind my clients is to right systemic injustice that has been the result of centuries of work, it will take longer than a year to fix. in one part, we see innovation has made -- organizations have made progress, but there is plenty to do. it is right to take a skeptical view and say why is it this money has not been spent, but i am optimistic we will see over
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years that the money is actually being put to good use in the way these organizations intended. emily: you helped train tech companies and executive , companies like airbnb, twitter, lyft. do you see a difference how tech deals with these issues and other industries deal with it? >> one big difference between how tech and other industries, be it entertainment, law, finance, or anything else, the tech sector is a very public sector. the tech sector is creating ways of life that help all of us connect with each other. so there's a bigger responsibility on that industry to get this right. that said, i think tech is grappling with what it means to be learning on the go as you are working to right these systemic injustices. emily: a startup that helps other companies recruit diverse talent, they found something
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interesting that companies that made statements of solidarity, black lives matter, they had 20% fewer black employees on average than those who didn't make those statements. what are we supposed to take away from that? >> one takeaway is organizations that have far fewer black folks know that they need to speak up so that folks know they care. there is fascinating research done that looks at how people of color consider whether they want to join organizations. representation is one very important piece. so is what the company says they believe. i think the organizations who have made these statements, if on average they have fewer black employees, are because they know the but not only step is they first have to explicitly say what they believe to make sure black folks know they will be able to join a psychologically safe space that will put action behind those words. putting action behind those
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words is what the organizations have to do as a follow-up. emily: you have companies like coinbase, who have banned talking about politics at work. i wonder, is this a good move by employers? should they allow discussions about racial injustice? should they speak out about racial injustice? the argument is that is this allows them to work on their core work, core mission, whether it is cryptocurrency or something else. >> my answer as to whether we should talk about racial injustice at work is yes. i think coinbase and any others doing that kind of silencing are wrong. the reason for that is two fold. you have to consider who the first people are that need to focus on the core work, and what are you signaling to folks whose identities are inextricably linked with racial injustice happening out in the world? what are you communicating to them by saying your stuff is on the fringe, it is distracting. my identity, my experience is
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not a mere distraction. it is part of who i am, an essential part of who i am. the other reason it is a bad move is that we found in our report that most people want to be talking about this at work. over the past year, we experienced a collective awakening in what it means to understand racial inequity in this world. we spent a lot of time at work. so figuring out how to have these conversations, not just interpersonal circles, is paramount. emily: you bring up an interesting point. we spent a lot of time working from home over the last year. the workforce is now going through a major transition. some employees are coming back. i wonder if it means confronting some of these issues all over again. how do you advise employers, managers, and workers to navigate that transition, knowing they have been through an incredibly harrowing experience and have to go
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through this new transition all over again? >> the biggest thing folks can do as they are transitioning back to working in the workplace, and if you are still remote, is to lead with empathy. that means listening to what people are sharing about their experiences, creating space by bringing an expert to hold those discussions or train internal people to do so, and make sure as you are listening to people, hearing what they need, that you are prepared to take action based upon what they say. that is something that is true, whether or not we are in a remote world, a hybrid world, or back in the office. all employers need to get better at listening what employees need, and taking action as a result. emily: dr. evelyn carter, thank you for joining us. paradigm managing director. really appreciate you taking the time. i want to bring you some news of changes at the helm of the gaming giant electronic arts. it has been announced the chair
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will step down at that annual shareholder meeting coming up in august. andrew wilson will succeed him. the ceo was there from 1991 to 2007. he helped launch popular games like "fifa" and "madden nfl." next, buckle up as we take you on a ride in one of the next big things on the ev market. how does it handle? we will find out next. this is bloomberg. ♪
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emily: lucent motors was supposed to be the next big thing in electric cars. its debut was to rival the power of tesla. they secured billions of dollars, but the road to production has been harder than expected, and covid is hurting
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its supply chains. ed ludlow took a ride in the latest factory built prototype with the ceo to discuss. >> lucid motors is pretty far behind its original schedule. it called investors' attention in august when it said the debut ev could do more than 500 hours on a single charge. production was supposed to start at the end of 2020, but it slipped when covid hit. >> covid wreck havoc with that process. there are always going to be weaklings when you have an international supply base around 250 suppliers. >> in february, lucid did a deal with a blank check company allowing them to list as a public company and will generate more than $4 billion cash. lucid also agreed to delay the start of reduction because churchill had quality control concerns. the net result? lucid will build just 577 cars this year. >> it was so important to get it
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-- to get the quality right. it was so important to be responsible as a public company to under promise and over deliver. because it will kill us if we launch this anything over than top-quality. it will kill the brand. >> he says 20,000 units next year is realistic, but before customers get behind the wheel, more testing is needed. >> we are assessing the quality, integrity of systems, and software. we are developing ride handling. >> to get an idea of how much progress they are facing, we asked the ceo to take us for a ride. how much is the pace of preproduction in your hands right now? >> a lot of it is in our control. some of it is frustrating with suppliers falling behind. >> lucid as a plant in arizona near completion and has hired hundreds of staff.
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>> i don't see improvement right now, and that is why we are putting further mitigation actions in right now. putting it to get an action right now. >> the company also treat the performance and cut weight. the debut version will have more than 1000 horsepower. my ride has a mere 800. >> that is so fast. it is head to the back of the head rest kind of stuff. lucid prototypes are fast. it has not quite lived up to the hype of being a competitor to tesla or german carmakers in the luxury space. he was the chief engineer on the model s. elon musk has been repeating the same line for a a while. prototypes are easy, production is hard. do you agree? >> i think to do a mediocre prototype is easy. to do a prototype of something that is pushing the envelope with world-class technology is
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superhard and i think putting that into production has its own challenges undeniably. >> do you think that line he says is directed at you guys specifically? >> interesting. >> we will continue building cars and grind away at the quality. as a team, we will decide that we get to a stage. >> the merger and the listing is due to take place at the end of the second quarter. ed ludlow, bloomberg news. emily: thank you for that story. that does it for this edition of "bloomberg technology." i am emily chang in san francisco back in the studio. we will be back here tomorrow. this is bloomberg. ♪
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