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tv   Bloomberg Technology  Bloomberg  June 9, 2022 5:00pm-6:00pm EDT

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>> from the heart of where innovation, money, and power collide, in silicon valley and beyond. this is "bloomberg technology"
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with emily chang. emily: i'm emily chang in san francisco and this is "bloomberg technology." coming up in the next hour, new information on musk's big backers in his bid to take over twitter. i on the list, a new buy-based firm with a secretive founder. plus i am joined by klarna ceo sebastian siemiatkowski. is he worried about apple moving into klarna's buy now, pay later territory? and arianna huffington joins me to tell me how she got some of the biggest companies in the world to sign drive's mental health pledge, covering millions of workers. we are going to get to all of that in a moment but first let's get to the markets and a selloff late in the day. meta, apple and amazon all
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ending the day down more than 3%. katie greifeld joins us with more. katie: it was another down day on wall street led by some big tech giants. he saw the nasdaq 100 fall almost 3%. the s&p 500 down 2.4% on this thursday. chinese tech fared even worse. the golden dragon index snapping a three day streak of gains down a most 7%. all this coming as treasury yields continue to rise. rate on 10 year treasuries about 3%. never really good news for equities, but it is june 9 which means finally meta is switching a sticker from fb to meta. if we take a retrospective look, this is a rebrand that has been met with little enthusiasm from investors. you can see meta shares since the rebrand was announced all the way back in october, shares are down 37% since then. a lot of that decline came from
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that user growth stalling announcement that came earlier this year, but still not a lot of love for this hard pivot into the metaverse. it was another bad day for meta, also a bad day for a lot of media companies. if you look at netflix, warner bros., paramount global, on the red, and disney too. disney down almost 4%, a fifth straight day of losses, their longest losing streak since november. emily: all right. interesting. katie, thank you. a secretive $5 billion fund is helping elon musk's bid to buy twitter. by capital has committed $700 million to finance musk's $44 billion deal. the firm is based in dubai and was founded by alexander thomas, a german investor who previously worked with a russian billionaire. kurt wagner joins us to discuss. tell us more about the significance of this fund's involvement. kurt: it just goes to show how
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far-reaching elon had to go in order to get funding for this deal. it also goes to show how international i think there is interest in twitter right now. mostly in funding a project that elon musk cares about. buy has a history of connecting itself with these big-name tech backers like elon. i think they are also in the boring company, which is elon. they have done investments in spacex before. i just think it kind of gives a bit of an international flair to this whole thing and goes to show exactly how far elon is having to go in order to find funding for this thing. emily: and they are the third-largest outside equity investor in the deal, so they are getting a big chunk of this deal. talk to us about where the discussions between musk and twitter stand on bots. there has been a lot of back-and-forth. kurt: the latest this week was
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that elon came forward, he formerly filed a letter with the sec saying again, hey, i may walk away from this deal if i do not start getting information to prove the bot number twitter claims is legit. now what we heard from yesterday is twitter is going to get him access to the api, which is known colloquially as the firehose of tweets. so every public tweet on twitter is now going to be accessible to elon and his team, they can do with that as they wish. i am not exactly sure that will answer the bot question for him, but it seems they are trying to figure out a middle ground here where he can get the answer he needs and they can move forward. emily: another story, meta had been working on a watch we imagine would be a competitor to the apple watch. they have now stopped those plans. what happened here? kurt: they are still working on a smartwatch come i want to be clear on that. the one you may have seen written up in the press is no
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longer going to be developed and that one had two cameras. it had a front facing camera, but also a camera on the back, and you could take the watch off the strap and hold it up to take pictures. what happened was the back camera against your wrist was interfering with the company's ability to use the watch as a controller. one of the things they want to do with wrist wearables is they want to be able to determine when you are moving your hand or your fingers so you can use that as a controller for augmented reality glasses. the camera was interfering so they are going to get rid of this prototype and do something else with the watch. as you pointed out this was considered something maybe they were doing to compete with the apple watch, so the fact they are moving to something else obviously is notable. emily: all right. bloomberg's kurt wagner, thank you. back to the musk twitter deal, another backer of the deal is larry ellison. the oracle founder is the world's 11th richest person with
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a net worth of $88.9 billion. in 2012, he bought 98% of the hawaiian island for $300 million. that purchase came with two four season resort, a significant chunk of tomes, and practically all of its commercial properties. overnight, ellison became almost everyone's boss, landlord, or both. in today's big take, sophie alexander took a deep dive on the impact this has had on the people there. i am from hawaii. talk to us about the history of this island. i am very familiar with it. how was it that one person was able to buy almost the entire island? sophie: it is unique because you think of billionaires buying for live at islands and that is not a big deal, but this one is different because 3000 people live there. lanai's history goes to the 1800s and were in person -- where one person bought up
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chunks of the land and slowly accumulated pretty much the entire island. that passed from one family to another until in 1922, james dole bought it, and he started turning it into the world's largest pineapple plantation, which it was for seven decades. then it passes to another billionaire, david murdock. then in 2012, larry ellison bought it. emily: and of course there are still thousands of regular people who live there. how exactly are they being impacted by larry ellison now owning it? sophie: this is interesting because like i said, the people who live there and who have lived there for generations are used to being under the control of a single company or a single person or family. but larry ellison is a whole different animal. he has $90 billion. that is a lot of money. it is nearly double what he had before the pandemic started. the last billionaire only had $2 billion. they call him the poor billionaire. so larry could do whatever he
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wants and it is starting to show. emily: and what exactly is he doing? tell us. the stories in your article are absolutely fascinating. sophie: in true billionaire form, he decides he doesn't like the food so he builds one nobu. he renovate the two four season resorts and some of now they are fancier than ever for thousands of dollars, tens of thousands of dollars a night. he is also doing things for the community. he bought the grocery store and he renovated it. but that is the main concern, is that he is buying up a lot of the small businesses, he is buying up more houses, and people are nervous. emily: so generally, you use the word nervous. people are not happy with this change, even though they are dreading -- getting a new grocery store, for example? sophie: it depends on who you ask but it is more of anxiety because of a lack of communication. people do not know ultimately what larry's plans are, so they do not know what their future is going to look like here, so more
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and more of them feel like there is not a place for them on the island. it is being catered to the uber, uber wealthy and not to the locals. emily: a lot of these people, their livelihoods, they work at these resorts. is larry ellison wilson -- is larry ellison spending a lot of time there. sophie: he moved there during the pandemic and that has been key. it was sort of out of place, out of mind. but now that he is there, his plans are picking up. he is building a school, a complex for himself, a new housing construct. he shut down his third hotel for a workforce housing for the entire year, and a lot of this is happening with no key medication with the community. emily: interesting. it is a fascinating read, you can check it out. sophie alexander, thank you. check out the article in bloomberg businessweek. more musical chairs at disney. ceo bob chapek has abruptly
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fired the head of television, peter rice, for not being a team player, according to bloomberg sources. rice was chair of general entertainment content and oversaw a vast swath of shows carried across disney networks. the sudden firing is the latest twist in a tumultuous stretch for chapek. he wrestled with challenges that included a high-profile dustup with florida governor ron desantis over a new law limiting discussion of sexual identity in classrooms. coming up, after apple announced it was getting into buy now, pay later, affirm ceo told me he is not worried. does the ceo of klarna feel the same way? i will ask him next. later, i sit down with two senators from opposite sides of the aisle who are working together to reppert -- regulate crypto. this is bloomberg. ♪ >> you cannot say
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cryptocurrencies go here. you have to say this particular token, this particular digital asset is regulated sec or somewhere else based on its purpose. ♪
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emily: we're learning more about apple's into the buy now, pay later business. the company will handle lending and turning -- lending including credit checks. a significant further push into financial services. some see this push as a threat to the more established players including affirm and klarna. what is it? joining me now, sebastian siemiatkowski, ceo and cofounder
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of klarna. i was at apple when they were unveiling this and everyone immediately thought about companies like klarna and affirm. you tweeted that, plagiarism is the highest form of flattery. but are you worried that this could hurt your business? sebastian: not really. first of all, i think it is a great win for consumers worldwide that apple is raising a vet -- a better form of consumer credit. we are looking at an industry of retail banking payments that has a market of $440 billion worldwide. it has been constructed anyway traditionally credit cards have been making a fortune by trying to get us to revolve at high interest rates once we get that credit card statement every month. this form of credit is better for consumers. so i think it is fantastic and klarna has been offering this form of credit for a while. i would be mostly worried if i was one of those credit card banks who embraced apple pay and was so happy to embrace this new
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technology, and now suddenly find myself having this company in front of my credit card promoting an interest-free credit instead of my 40% revolving credit one, then pushing that customer to another provider. that, to me, should be the big headline of this news. for us, klarna has 150 million users worldwide. we are one of the largest third-party global payment networks in the world. it is a fantastic product that has drawn for medically well for us in the u.s. and helped us a lot gain recognition and so forth. but people are using us for a lot of reasons. one, not the least, the fact we are the richest data payments network in the world because we have sku. 40% of our transactions are debit, not even credit. so i mean, i always think, to his nice and i am also fortunate to have a neighbor here in the founder of spotify who can give
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me some tips on how to compete with apple successfully. emily: good to know that you are friendly. i also spoke with the affirm ceo. he similarly said it was a win consumers, but he also said something else. take a listen. >> why i am not particular worried about apple pay entering the buy now, pay later space, they are focused on the convenience of a six-week product which i think is great and there are plenty of competitors, and they should be worried i think. this spells a certain level of concern for folks who are specialized in this short-term product. emily: is he calling out klarna there? sebastian: he might. you know, it is funny, me and max have a long history. i remember trying to recruit him as a board member and being surprised by him announcing affirm six months later. emily: ooh, ok. sebastian: so we have a fun history, me and max. but look, they are very
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distinctly -- he is very accurate about one thing. klarna and affirm are distantly different businesses. 90%, if affirm is reporting correct, 90% of their business is financing. long-term financing. if i understand correctly, reports online, 50% of their balance credit is priced at 25% to 30% interest rate, rates that we do not even go to. klarna maximizes at 25%. it is a very different business. he is lending high ticket items to people who think 30% interest rate is attractive. klarna is a payments product, we have the largest account to account based payments in the world. so these are distinct, different businesses. so, yes, in that i agree with him. emily: some shots fired there, i will have to get max to respond to that. he also talked about how affirm
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is hiring, and klarna did have some layoffs recently. i believe you announced plans to lay off 10% of your workforce. when you look back, do you see any mistakes in your execution, and does this mean that you are kind of, slightly less optimistic about how big the market can be for klarna than you were? sebastian: no. for us, there's a long-term opportunity in this, which is that i believe we are going through a similar revolution in retail banking payments that retail went through 10 years ago. i have been running klarna for 17 years now, where of the 14 first years were profitable. and i went through the financial crisis with this company in 2007, 2008. what happened in the last two years as we have been very focused on establishing ourselves in the u.s. we have 25 million users, we have macy's, -- it's been a very -- it has been
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very clear, as a lot of companies in the u.s. have understood, is there's a shift in investors being entirely focused on asking what are you doing to grow faster, six to nine months ago, are now asking about profit ability. we have the benefit of being a profitable company for a long time. we now invested heavily and we said the end goal is the exactly the same, but there will be a slightly different path towards that. that unfortunately led us to something i find obviously very sad, that we as a consequence of that, decided to make changes and that has led us to suggest and ask people to offer them severance packages and so forth, and asked some people to leave klarna. it is obvious he very sad, because these are all amazing talent, amusing people who have contributed to the company. it is a sad thing to do but i
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think it is the right thing considering how the market looks nowadays. so i think it will set us up even better for future success going forward now in this new market environment that we are in. emily: i know you made quite a move and shared some of their details, which i hope they are getting some inbound, all that great talent. as you have said, the goal is to become the world's largest retail bank. given regulation, given the changing competitive landscape, how far out is that vision, in the united states and abroad? sebastian: we are quite far ahead. to me, like, if you look at this from a future perspective, what i believe, and what i have believed for a long time, is someday in the future, you wake up in the morning, your computer says to you, your financial assistance or see you, i realize i can save you x amount of dollars by shifting from supplier a to supplier b, and all you have to do is say yes. it is a little like self-driving
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cars. i don't know when it will happen, but it will happen. the future of banking is very different than what we traditionally see. where backs are obsessed with giving depositors as little as possible and then borrowing out at the highest possible interest rate. the true future of retail banking is somebody is on the consumer side trying to help them save time, save money, make them less worried about their finances. it has been very clear to me that who those five or four large companies that will dominate that space in the next 10 years on a global basis will be, is somebody global and someone with a banking background and willing to pursue that. we see apple now consuming -- pursuing some of that. they will be traditional banks. klarna with its 150 million users and a data set much richer than anyone else is giving us a tremendous opportunity to lead in providing more value for consumers and be on the consumer side.
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i am also happy even though media has question things like buy now, pay later, we are seeing other people adopting and recognizing it is a better form of credit. so i feel very excited about it. emily: sebastian siemiatkowski, klarna ceo, thank you for joining us, as always. coming up, meta is now a leader in another social media trend -- lawsuits. why the company has been sued more than half a dozen times, just in the last week. that is next. this is bloomberg. ♪
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emily: in the last week, eight lawsuits have been filed across the country against meta. the suits alleging the company built algorithms leading young people into addiction. for more i am joined by bloomberg's mouthy nyack. what kind of addiction are you talking about here? >> they are claiming that
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facebook and instagram have created algorithms and products that keep users hooked onto its platforms, especially young users, and they promote excessive use of these platforms through these algorithms. they are claiming that meta knew these algorithms were problematic and they would lead to issues such as eating disorders, adhd and depression, among users, but that the company continued to keep these products and services going to drive profit. emily: this echoes what the facebook whistleblower testified to congress about, how is facebook responding? malathi: facebook has not responded in quotes yet. a spokesperson declined to comment, because it is ongoing litigation. but she pointed out tools for parents to control screen time, and resources like having these little pop-up messages that come up if a user looks for
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information on an eating disorder, for example. then there would be tips and resources pop up on screen to help the young users deal with these issues. emily: are these lawsuits coordinated? malathi: there are a bunch of firms. there is one group in seattle and another firm which just filed these eight suits in the last week. so at some point they could get consolidated in court, but right now they are separate efforts. emily: ok. interesting. malathi nayak, thank you for that update. my next guest is leading the push to make mental health a priority, and she got some pretty big names to join. arianna huffington of thrive joins me next to talk about how she has gotten so many others to make this commitment. that is next. this is bloomberg. ♪
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emily: welcome back to "bloomberg technology."
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i'm emily chang in san francisco. we have heard so much about mental health over the last few years, as we have all had to navigate the uncertainty of a pandemic, from home to work. this is why thrive is partnered with the society for human resource management to get some of the biggest companies, from microsoft, salesforce, uber, and walmart, to make a commitment to employee health and well-being. joining me right now, ceo of thrive, arianna huffington. great to have you back with us. so what exactly are these companies committing to do? arianna: basically, they are committing, during these tough economic times ahead, not to cut mental health and well-being offerings through their employees. as you know, emily, over the last two years we have seen an incredible increase, over 90 companies, have increased their mental health and well-being offerings to their
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employees. over the last two years every company practically became a health care company. these are amazing advances. as companies are making tough decisions, we wanted to make sure there is a real commitment not to cut down these fundamental services, especially at a time when the mental health crisis is seen as the second pandemic. and we were thrilled with the response. within a week we got over 80, both fortune 10 companies, and high-growth startups, to join the pledge and sign-up. emily: we have been hearing a lot of talk about mental health lately. it's also being blamed for gun violence. i'm curious if you think this issue is being politicized. arianna: well, mental health crisis israel. -- is real. and everything is being politicized today. but the truth is we have seen
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unprecedented numbers of depression and anxiety. and that we know there is a lot that can be done by changing our everyday habits around sleep, around food, around the thoughts we hold in our heads, to change outcomes. and that is one of the things companies are doing, beyond just the medical intervention if things get really bad. there is a lot we can do about prevention. emily: so, the question is how, and often how much, is our own tech-obsessed culture making all of this worse? you and i have talked about facebook, and now meta, which as we were just discussing earlier, is being sued across the country for knowingly coaxing teens into different forms of addiction. what do you make of that narrative? arianna: so obviously i do not know the details of the lawsuit, but what i do know, and what
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every parent knows, is that managing the relationship of their children to technology, to social media, is really hard. you and i were talking about your nine-year-old son, and how long can you wait before he even gets a phone. and that is something that is based on observation. at thrive, we launched a dedicated curriculum called thrive in kids. because one of the companies we work with, pfizer, saw the concern that working parents are having over the relationship of their children to their phones, to social media. they are growing at skyrocketing rates, depression and anxiety among children and teenagers. emily: it is a huge issue and i am so glad you are looking at it more closely. i also have to ask you about
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sheryl sandberg, because i know you are close friends, and we have seen this great resignation happening across the country in the world. and some people did not expect to see sheryl sandberg be part of it. were you surprised how long she stayed, or do you have any more insights as to why she left, and now? arianna: i am very, very proud of her for taking that step. emily, you and i have talked a lot about women, and so often i talk to friends in big corporate jobs who stopped really feeling that that is what they want to be doing. but so many women -- and men, but especially women, become so identified with their jobs. and we know from everything sheryl has done beyond facebook, with her work with option b, helping people who have experienced loss to rebuild their lives, that this is an
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amazing new chapter for her. and i profoundly believe that life comes in chapters. i have had many chapters myself. and i remember when i was debating launching thrive, i called sheryl and she gave me the advice to take a deep breath, close my eyes, and just jump. these changes, these jumps, require courage. it is always easier to stay where you are, especially one staying where you are is a huge job. emily: well, that is a perfect segue to my next question, because you know a thing or two about owning a media company, and i am so curious what you think about you en masse -- about elon musk and his bid to buy twitter. i know you gave him advice to sleep more. any advice for him now? do you think he is a good owner? will he be a good owner for twitter, if it happens? arianna: first of all, emily, are you surprised that a company
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like twitter, that arrives on drama and conflict, is engulfed in more drama and conflict with a man who enjoys drama and conflict? i'm actually much more interested in elon's decision to bring everybody back to the office full-time. i think that is going to become a very key decision for companies. for me, what is being missed from this conversation is that more important than where people are working is how they are working. again, in the same way with the mental health pledge, we want to avoid regressing into the pre-tim -- pre-pandemic past. the same applies here. we need to avoid regressing into cultures driven by burnett. and -- by burnout. that means whether people work in a hybrid environment, remote, or back in the office, everybody
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has to be much more intentional about the new work order. we cannot pretend that we can unring the bell, that millions of people worked remote and did a lot of good work. but we need to become a lot more intentional about building the social capital that we do lose when people are not physically together all the time. and that means not having people come back to the office to take zoom calls from their cubicles. and that's a priority for us at thrive, being much more intentional about on gordon -- about onboarding. being much more intentional about hybrid rituals, like something we call reset, where people create their own 60 second reset of what gives them joy and share them with teammates.
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a lot of work has to be done to navigate the new world order. and whatever model a company chooses. emily: you cannot unring the bell. we will try to get elon that advice, arianna, maybe via twitter, since that seems to be where he is hanging out. arianna huffington, founder and ceo of thrive, always love having you on the show. thank you for stopping by. coming up, the future of crypto regulation. how a democratic and republican senator are taking a stab on working on this together. senators kiersten jill amanda and cynthia lummis join me, coming up. this is bloomberg. ♪
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emily: today we are talking crypto regulation. a new bill that could help clarify which digital currencies are commodities in which our securities. it just got new support by the commodities futures trading commission. the bill would give them more power. i sat down earlier was senators kirsten gillibrand from new york and cynthia lummis from wyoming, who wrote the bill. take a listen to what they have to say. sen. gillibrand: i don't think any bill can satisfy everyone. our goals are simple, we want to create safety and soundness in the american market. we want transparency and accountability. and we want to have consumer protections. most industry players want to have rules of the road so they know they can count on it, so they know they can create a business plan and know that is consistent with what u.s. laws are likely going to be. and so, what senator lummis and i worked on is a comprehensive framework to give guidance about
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which digital assets will be regulated through the cftc, which will be regular did through the sec, giving irs jurisdiction over all, making sure we have rules for stable coins and occ. so, we're doing the work that it takes to create that stability and create the essential transparency that this industry wants and needs to thrive. our goal is not to over regulate. our goal is to have exactly the right amount of oversight so that the industry can actually thrive, grow, and continue to innovate in the u.s. emily: on that note, wyoming is steve tin the history of the wild west, and a lot of investors are attracted to crypto because it is unregulated. how do you strike the right balance here? sen. lummis: well, we have decided to use the existing regulatory structure for traditional assets and lay the structure for digital assets on
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top of it. that's why we're using the commodity futures trading commission, the sec, and the ir s, in their traditional roles. so, for example, bitcoin is clearly a commodity, so it will fall under the commodities futures trading commission. so will the stock market in the futures market. ethereum is almost certainly a commodity. and there are a few others will almost certainly be commodities. they will fall under the cftc. then, something that meets the howey test, which is a court-based test for what constitutes a security, will put those cryptocurrencies under the sec. and the sec has a strong history of being good at disclosures and consumer protection. so we believe we've found the
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right balance between these two agencies. the vast majority of these in terms of market share will be under the commodity futures trading commission. but the largest number of cryptocurrencies will probably fall under the sec. emily: and yet there is no real broad agreement on whether cryptocurrencies are commodities or securities. senator gillibrand, i am so curious, which do you think are commodities, which do you think our securities? sen. gillibrand: i think senator lummis just answered that question perfectly. the way we have structured this oversight is by purpose. what is the purpose of your digital asset? you meet the tally test? are you a company offering a stock to raise money for your company to fund your company? if that is what you are doing with your digital asset, you are therefore a security. and so, is there an issue work? is the issuer giving you something of value? is it based on the expertise of
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the issuer? those are all characteristics of securities. so it is not the name cryptocurrency that decides where you go, it is the purpose of the digital asset that you are offering to the public for sale that's going. to affect who is your regulator. . emily: it is wonderful to see two people from different ends of congress working together. and you have found common ground on this issue of crypto. is there space in one of the most polarizing of debates, the gun control debate, in which you two could collaborate as well? sen. gillibrand: there is a bipartisan working group right now that we are not part of, but yes, there's always common ground. that bipartisan working group right now is figuring out where does it lie. does it lie in reforming some aspect of background checks, red flag laws? gun trafficking is always bipartisan because it is just giving law enforcement the
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ability to cross state lines to find gun traffickers who are, by nature, criminal networks, giving guns directly to criminals. so those are areas where i suspect there will be some common ground, but we are not on that committee. and if they fail, then senator lummis and i will certainly take it up. emily: you did talk earlier this week about the volume of calls your office has gotten on gun violence, and sort of signaled that you were. . giving this additional consideration. and i'm wondering where you stand on this new bipartisan legislation now. where is your head at? sen. lummis: i have not seen the legislation. the calls that i were getting from people who want us to do something were not specific about they what they want us to do. they just want us to do something. because i were getting from people who were opposed to doing something are specific to guns, because my state of wyoming has a strong gun culture. so for me, i am going to be
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looking at issues like juvenile expungement of records for violent juvenile offenses, and i am going to be looking at mental health solutions. i'm worried that there are going to be a lot of young people coming out of the covid lockdowns that spent a lot of time on the internet viewing harmful websites that may trigge r them to be violent, or act out in ways that probably they would not have before we went into the lockdowns. those are the kind of things that were the most. those are the things that keep me up at night. emily: senators kirsten gillibrand and cynthia lummis there. you can catch that full interview at coming up, the future of cybersecurity, and how the u.s. can protect itself from cybercrime. up next, crowdstrike ceo george
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kurtz is here with me in person. this is bloomberg. ♪
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emily: the biden administration is taking new steps to shore up u.s. cyber defenses in light of russia's ongoing war in ukraine. the biggest cyber threats, a hot topic of the conference happening right now in san francisco. george kurtz was just there and. joins me now any studio. . so what strikes me different about this conference? george: certainly we are in person, which both vendors and customers were really excited about. there is a really strong interest in security. it is something i have talked about for a while. even if we go into a difficult macro background, security will be a top priority for boards and a top budgeted item to keep companies safe. so it is encouraging. obviously we are in that industry but we are also focused on customers.
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how do you consolidate spend in an area like security? emily: there have been conflicting reports on the state of the cyber threat landscape. for example, ransomware attack's. are they up or down? george: some of the dollar amounts are down and there are two reasons for that. you have seen movement in bitcoin as it has crashed and when you calculate all this it is down a little bit. the other piece is when you think about ukraine and russia and some of the cybercrime groups, they used to coordinate. now there is not a lot of coordination between the groups and some have splintered and fractured off. so overall it is still a really robust e-crime market. ransomware is still one of the top threats of the day and people are still paying bid dollars for it. emily: president biden warned about these potential cyberattacks from russia but it does not seem like it has happened yet. has it? are we missing something? george: russia continually has access to lots of systems around the globe.
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they are capable cyber adversary. emily: but it has not been as bad as what the president -- george: that is what i am trying to say. they have access and lots of places and once you start to destroy things, your access tends to get figured out. what people have to realize is in cyberwar it is a one-time use weapon. if something destructive is used, you can use it one time. the other thing that is interesting and it is a broader question is, would a cyberattack constitute an act of war. given the changing landscapes, it is unclear. emily: there have been criticisms about biden's approach to cybersecurity, pushing more responsibility on private companies. take a listen to what she had to say. >> when we are talking about ransomware, i think challenge with this issue is we have provided a perverse structure. we in the u.s. have created a
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thriving, strong market in ransomware. we now have companies that charge six figures to go on retainer to negotiate ransom, to get information about malicious actors. emily: what do you make of that? did we create our own problems? george: i don't know if we created our own problems. obviously if you look at the amount of money that can be gained from encrypted system, i think the bad guys have figured out if you can make $300 on one system you can make a lot more by taking out an entire company. it is just a function of the complexity of the technology environment, and the fact that from a regulatory or maybe from a legal framework perspective, it is very difficult to bring these threat actors to justice because they are all over the place and a lot of times you cannot get to them. so there are big dollars to be made in those areas. emily: speaking of dollars, crowdstrike's share price has dropped significantly. what should investors be looking for over the next six months, and what do you have to say to folks who are maybe skeptical? george: i cannot forecast the
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market, but when you look at our q1 earnings and what we were able to display, and we talked about that last week, you look at the growth rate, 61% annual recurring revenue, almost $2 billion. that's combined with cash flow generation, which is what investors are looking for. 32$ free cash flow generation. we think that is the right recipe and that is what we are focused on, executing and keeping our customers safe. emily: there are so many more cybersecurity companies than even last year because so many more have been funded. are they all going to survive? are you worried about the future of some of these companies? george: i think security is a complicated landscape and not even company, even ours, can handle everything in terms of certificate areas. that being said, a lot of companies are teachers. we are not true companies. a lot of them will not be
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public. when we think about what is happening today, public markets are locked up so you have a lot of private companies with high valuations that do not have an exit at this point. when you think about public market valuations going down that will lead often to the private markets. we have seen layoffs at some companies and we think it will be an opportunity for better hiring because of this lockup in the ipo market. and the second area is in the m&a front, we think there will be great opportunities in the future. emily: interesting. george kurtz, good to see you and here i personn -- in person. thank you for stopping by. that does it for this edition of "bloomberg technology." we are going to be back tomorrow with scott cutler. we will talk about that legal battle with nike, and a new report about the rise of counterfeit luxury. ♪
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