Speaker 1: From the heart of where innovation, money and power collive
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily jay I rememerly Chang in San Francisco, and this
Speaker 1: is Bloomberg Technology coming up in the next hour. Well,
Speaker 1: it could have been worse. That's what analysts are saying
Speaker 1: about Netflix results. Shares jumping in late trade despite losing
Speaker 1: almost a million subscribers could add solve the company's problems.
Speaker 1: We will discuss plus Twitter wins for now. A judge
Speaker 1: grants the company's request to fast track its lawsuit against
Speaker 1: Elon Musk. The trial now scheduled to start in October.
Speaker 1: We'll explore this particular judges record and what it tells
Speaker 1: us about which side has a better shot. And as
Speaker 1: a major crypto lender and hedge fund collapse, is regulation
Speaker 1: the answer? The head of US policy of coin Based
Speaker 1: joins us to talk about the way out of the
Speaker 1: ashes of the crypto crash. Let's stay with Netflix now,
Speaker 1: I'm bringing down morgantin, your portfolio manager at sent Novis Trust.
Speaker 1: So Dan, explain this to me. Why are shares up
Speaker 1: if they've still lost almost a million subscribers. Well, it's
Speaker 1: kind of a confusing report, Emily, isn't it. I mean,
Speaker 1: if you think about it, it's kind of a sigh
Speaker 1: of relief, I think by a lot of people coming
Speaker 1: to the numbers. I mean, obviously, the projections going into
Speaker 1: the third quarter below expectations. In terms of number of
Speaker 1: new subscribers. They're saying they're going to add a million.
Speaker 1: The street was looking for one point eight million. They
Speaker 1: did lose less, right than expected in the second quarter.
Speaker 1: I think there were a lot of estimates. Some people
Speaker 1: are saying as many as two million. They came in
Speaker 1: losing seventy thousand. The other thing that's kind of confusing
Speaker 1: to Emily is that if you look at their guidance
Speaker 1: going into revenues and earnings for the third quarter, they
Speaker 1: are also below consensus, and yet the stock was up.
Speaker 1: And the only thing I can think of, Emily, is
Speaker 1: that they're kind of addressing a lot of their issues, right.
Speaker 1: They talked in their shareholder letter about how they're going
Speaker 1: to address the issues with all these people a hundred
Speaker 1: million people you know that are using the service for
Speaker 1: free um and they talked a little bit about free
Speaker 1: cash flow and various other things. So I think maybe
Speaker 1: people are just saying they're addressing their issues. It was
Speaker 1: as worse as we thought, and hopefully things will get
Speaker 1: better in the future. And that's how we have to
Speaker 1: leave it because the stock is up. Let's talk about
Speaker 1: this crackdown on password sharing, because let's be honest, Netflix
Speaker 1: has been giving Netflix away for free for a while
Speaker 1: to a lot of people who just haven't paid up.
Speaker 1: If they cracked down on the passports, how big an
Speaker 1: impact do you think that will actually have in getting
Speaker 1: some of those people to pay up. Well's teteresting him
Speaker 1: because in the shareholder letter they mentioned they're going to
Speaker 1: test two approaches in Latin America and they're going to
Speaker 1: charge to nine a month, and they're going to try
Speaker 1: to work something to try to to get these able
Speaker 1: to start pain. So I'm kind of curious to learn
Speaker 1: a little bit more about that. That seems pretty low
Speaker 1: to me, right tone a month. I pay close to
Speaker 1: twenty dollars a month for my Netflix subscription here in
Speaker 1: the United States. But so it's gonna be kind of
Speaker 1: interesting to see how they roll that out and put
Speaker 1: that together and and try to monetize these people and
Speaker 1: bring them in. How So, I think we need to
Speaker 1: just learn a little bit more about how they're going
Speaker 1: to do it. But that's a huge number, a hundred million,
Speaker 1: So advertising be the answer to Netflix's problems, you know, Emily,
Speaker 1: it's kind of interesting because I'm curious to see how
Speaker 1: that's going to play out. Right, they signed the agreement
Speaker 1: with Microsoft to help them last week. On that. I'm
Speaker 1: just wondering. And I could ask you, because you're a
Speaker 1: big user Netflix, if they got to the point where
Speaker 1: they're offering an add you know, streaming service and there's
Speaker 1: not that many ads, maybe it's every fifteen minutes, which
Speaker 1: is you'd be willing to maybe just say, hey, I'm
Speaker 1: not going to pay the fifteen twenty dollars a month
Speaker 1: and just go straight for the free ad streaming service.
Speaker 1: So that's interesting. And then the other thing component is
Speaker 1: they have two or twenty million people using their system
Speaker 1: right now. How many people do they add to this
Speaker 1: new ad streaming service and do they start competing against
Speaker 1: the like so let's say a Facebook or Google in
Speaker 1: terms of garnering all this revenue through advertising. So I
Speaker 1: don't know how that's going to come together for them.
Speaker 1: They're gonna let us know more and they're introducing some
Speaker 1: new services, I guess in two thousand twenty three, So
Speaker 1: it's going to be interesting to see what happens with
Speaker 1: this new ad streaming Netflix right. Time is precious, and
Speaker 1: so is money down. I mean, I think i'd have
Speaker 1: to look at the numbers and also the ad experience.
Speaker 1: You know, what kind of ads are these? How long
Speaker 1: am I watching them? Are they pleasing? Are they really
Speaker 1: tailored to me? The thing is, and and this point
Speaker 1: has been made. You know, the companies that are brought
Speaker 1: up as competitors Disney Plus, m Hulu, Amazon, HBO. Disney
Speaker 1: Plus isn't necessarily a substitute for Netflix, is it? What
Speaker 1: Dosney Plus is interesting because they have about a hundred
Speaker 1: million subscribers, are the largest competitor next to Netflix. They're
Speaker 1: targeting about two hundred and forty million subscribers by two
Speaker 1: thousand twenty four, which seems like a really big number
Speaker 1: for them. But I think you're right, Emily, Disney Plus
Speaker 1: seems a little bit more different in terms of their
Speaker 1: content than what we find on Netflix. You were talking
Speaker 1: earlier about the various uh, you know, series that they
Speaker 1: have and how people get hooked on them. A little
Speaker 1: bit of a different component as Disney has that huge
Speaker 1: library of movies and content through all the years of
Speaker 1: Disney production, so it is a little bit different. But
Speaker 1: there's no doubt that Disney in terms of number of
Speaker 1: subscribers is the closest in terms of Netflix in terms
Speaker 1: of their having the you know, hundred million, which is
Speaker 1: pretty close to two or twenty million. The rest of
Speaker 1: the other players have much less subscribers. So here's the
Speaker 1: other thing. Is the return on content space spending, paying
Speaker 1: off or dropping off. If Stranger Things is costing reportedly
Speaker 1: thirty million dollars an episode, is that worth it? Yeah?
Speaker 1: It's interesting, Emily. You look at their content expense projection
Speaker 1: for this year, it's about seventeen point nine billion, which
Speaker 1: is pretty much in line with they projected last year,
Speaker 1: which is around seventeen billions. So it seems to me
Speaker 1: like Netflix is getting a little more cautious in regards
Speaker 1: to this attitude We're just going to spend tons of money,
Speaker 1: create tons of content, and we're going to get the
Speaker 1: subscribers and we'll be able to pay for it. Seems
Speaker 1: like they're starting to pull back a little bit in
Speaker 1: regards to their content budgets. And expectations. It's starting to
Speaker 1: be a little bit more careful on margins and so forth.
Speaker 1: So you bring up a good point, where do you
Speaker 1: just keep spending and spending and spending if you're not
Speaker 1: getting the subscriber growth because your subscriber growth is negative.
Speaker 1: Doesn't make sense to keep spending more and more money
Speaker 1: on content. You need to bring it back in a
Speaker 1: little bit and kind of refocus, and it appears that
Speaker 1: they're starting to do that instead of this growth at
Speaker 1: all cost model, which is what they were doing in
Speaker 1: the past. All right, well, we're going to continue to
Speaker 1: digest these Netflix results to have a bit more later
Speaker 1: in the show, Dan Always get to have you here,
Speaker 1: Dan Morgan, Novist Trust. All right, coming up, Twitter gets
Speaker 1: the green light to take Elon Musk to court and fast.
Speaker 1: We will talk about what's next in Twitter v. Musk
Speaker 1: with a Columbia law professor and our very own Kurt Wagner, Mr.
Speaker 1: Is Bloomberg. Round one goes to Twitter. The company was
Speaker 1: granted its request a fast track its lawsuit against Elon
Speaker 1: Musk as he attempts to walk away from the fort
Speaker 1: four billion dollar deal. Delaware Judge Kathleen McCormick set a
Speaker 1: five day trial to start in October. For more, we're
Speaker 1: joined by Eric Talley, Columbia Law School professor and faculty
Speaker 1: co director of its Millstein Center, along with our very
Speaker 1: own Kurt Wagner, who of course covers Twitter for us.
Speaker 1: So what actually happened in court today? And by in
Speaker 1: court I mean virtual corp? The judge actually has COVID,
Speaker 1: Yes she does, so, I was listening on the dial
Speaker 1: in the public die Island, actually, which felt very interesting
Speaker 1: to listen to arguments that way. But both sides kind
Speaker 1: of presented their case. Obviously they had already submitted written, um,
Speaker 1: you know, elements to this. The judge took a little
Speaker 1: bit of time to review and think about things and
Speaker 1: then and issued a pretty quick verdict. You know, she said,
Speaker 1: based on the evidence, based on the arguments that had
Speaker 1: been made, I feel that it makes sense to speed
Speaker 1: this up. Not quite as fast as Twitter wanted. They
Speaker 1: were hoping to do a trial in September, but she
Speaker 1: still thought that, you know, the longer this thing drags out,
Speaker 1: the more chance there is for damage to Twitter's business
Speaker 1: and brand. And as a result, she said, we should
Speaker 1: do this in October. Versus the Musk team wanted to
Speaker 1: wait all the way till February. Now, Professor Tally, you
Speaker 1: actually know the judge here and know her record well.
Speaker 1: I understand she's a seller friendly judge, or at least
Speaker 1: has made seller friendly decisions in the past. What can
Speaker 1: you tell us about her? Yeah, I think she's largely
Speaker 1: right down the middle in terms of her predilections. But
Speaker 1: she's very good. She works harder than just about any
Speaker 1: judge I've ever met, and it's extremely smart. Now, the
Speaker 1: thing to remember is that the Delaware courts have seen
Speaker 1: a fair number of these cases in which buyers get
Speaker 1: cold feet and try to walk away, whether it's because
Speaker 1: of COVID the financial crisis. So in many ways, this
Speaker 1: is the most recent chapter. And Chancellor McCormick actually had
Speaker 1: one of these cases that came up during COVID about
Speaker 1: a year ago, and she did hold for the seller.
Speaker 1: Basically told the buyer, you know what, You're gonna be
Speaker 1: required to go forward with this transaction by the company
Speaker 1: that you're now trying to walk away from. And I
Speaker 1: don't even care that your financing has fallen through because
Speaker 1: you sort of made that happen. You sort of engineered
Speaker 1: or sabotage your own deal. So during the argument today,
Speaker 1: there's a lot of argument from Twitter's lawyers about whether
Speaker 1: Elon Musk had similarly been trying to sabotage the deal.
Speaker 1: Now we haven't gotten to any of those matters yet.
Speaker 1: The key question is whether this deal, this this litigation
Speaker 1: was gonna get fast tracked or put on the slow track.
Speaker 1: And we're definitely on the fast track. While Twitter lawyers
Speaker 1: didn't get exactly what they were hoping for, they ended
Speaker 1: up missing it by only about a couple of weeks,
Speaker 1: and she pushed what they had hoped to be a
Speaker 1: September trial into October. So largely one would chalk this
Speaker 1: up to a victory, at least as of today, to Twitter.
Speaker 1: So the question is how big a victory. I mean,
Speaker 1: you talk about precedent here, but was that other case
Speaker 1: of forty four billion dollar deal, and did it involve
Speaker 1: taking on Elon Musk Unless there are cake decorating companies
Speaker 1: that are worth forty four billion dollars, No, it wasn't.
Speaker 1: This was a small deal. It wasn't even a publicly
Speaker 1: traded company. And so there is a kind of an
Speaker 1: interesting question about whether when the stakes get ratcheted up
Speaker 1: like this, Chancellor McCormick is similarly going to be unsympathetic
Speaker 1: towards a buyer that wants to walk away. However, Uh,
Speaker 1: this particular deal, and everyone knew this because it was
Speaker 1: out there in the public domain. Uh, you know, Elon
Speaker 1: Musk went after Twitter. They were a reluctant seller. They
Speaker 1: finally signed up the deal when he said, hey, I'll
Speaker 1: make this a really sell her friendly deal. I won't
Speaker 1: do any diligence on a bunch of these technical aspects.
Speaker 1: And only after the deal got signed up did he
Speaker 1: start to seem to have problems with bots. And I
Speaker 1: think a lot of people, including Twitter's lawyers, said, you know,
Speaker 1: this is a pretext. This is essentially the beginning of
Speaker 1: an elaborate set of demands that was really intended to
Speaker 1: engineer an exit ramp for Elon must So one of
Speaker 1: the key um claims that he made was, oh, this
Speaker 1: bot problem is bigger than I thought it was going
Speaker 1: to be. But that was never really in the document itself.
Speaker 1: It was never in the agreement itself. It's sort of
Speaker 1: something that he injected into the picture. And I think
Speaker 1: one of the key questions that people were looking at
Speaker 1: today was whether the judge was going to be willing
Speaker 1: to take a long term litigation approach, which would be
Speaker 1: kind of a signal that she might be more willing
Speaker 1: to listen to some of this bought count war, and
Speaker 1: instead she's fast tracted. There's still gonna be arguments about bots,
Speaker 1: don't get me wrong, but they're not going to be
Speaker 1: the sort of blown out thing that Elon must and
Speaker 1: his lawyers wanted. You know, the professor makes a really
Speaker 1: good point. So much has happened you almost forget that
Speaker 1: Twitter didn't want to do this deal in the first place,
Speaker 1: and now here we are. What are you hearing from
Speaker 1: your Twitter sources about what they are going to be
Speaker 1: doing over the next few weeks. Well, obviously there's a
Speaker 1: lot of preparation that will go into this. But I
Speaker 1: think this, you know, as Eric mentioned, like, this is
Speaker 1: a good win for Twitter because it shows that their
Speaker 1: argument is already being well received, right, which I think
Speaker 1: was the big thing. I think they've already sort of
Speaker 1: one a little bit in the court of public opinion here.
Speaker 1: I don't know, I certainly on on my Twitter feed.
Speaker 1: You know, there was a lot of support for Twitter
Speaker 1: from their lawsuit. I've I've certainly seen employees seem to
Speaker 1: be happy with how the company has handled this. So
Speaker 1: I think at this point it's about trying to remove
Speaker 1: a lot of the uncertainty, right because the company has
Speaker 1: been in this weird state for months where they you know,
Speaker 1: they say, hey, it's business as usual, but you can't
Speaker 1: imagine that, you know, you're gonna be putting a six
Speaker 1: months twelve month product roadmap out the door when you
Speaker 1: have Elon Musk covering there. So I think at this
Speaker 1: point again, they want to do this as quick as
Speaker 1: possible so that they can get back to doing things
Speaker 1: like shipping products, doing things like, you know, improving the business. Indeed,
Speaker 1: um Professor Tally, how do you think Elon Musk's larger
Speaker 1: than life personality, the fact that he has a hundred
Speaker 1: million Twitter followers himself. I mean, there's a pretty uh,
Speaker 1: you know, if if we're talking about the court of
Speaker 1: public opinion, Elon Musk has a lot of fans. How
Speaker 1: do you think that will influence this trial? Well, there's
Speaker 1: a sense in which it already has. One of the
Speaker 1: arguments that Twitter's lawyers made today was that you just
Speaker 1: can't leave this deal in limbo when it may just
Speaker 1: be thrown into utter chaos if we're going to be
Speaker 1: going into another year's worth of litigation, and that may
Speaker 1: be in part due to their arguments about the amount
Speaker 1: of damage that Elon must could potentially do here. Now,
Speaker 1: it's definitely true that that you know, there is this
Speaker 1: There has long been this kind of question about whether
Speaker 1: Mr Musk has some sort of I don't know, Elon
Speaker 1: exceptionalism that wouldn't that wouldn't make him bound to the
Speaker 1: same rules that applied everyone else. This is an early
Speaker 1: shot across the bow that suggests that this judge in
Speaker 1: particular is willing to treat this case just like she
Speaker 1: would any other case. And when you've got a deal
Speaker 1: that has gotten signed up on very seller friendly terms
Speaker 1: with very little due diligence in what seems like, at
Speaker 1: least at present, to be a bit of a drummed
Speaker 1: up reason to want to walk away. Uh, you know
Speaker 1: that the the musque team probably has an uphill battle
Speaker 1: to climb here. Uh you know, I think there is
Speaker 1: a real sense as well that Delaware courts view this
Speaker 1: is kind of their um look in the mirror moment.
Speaker 1: They are widely reputed to be, and they embraced this
Speaker 1: as the place where sort of grown ups go to
Speaker 1: to to transact with one another. And if you put
Speaker 1: something down on paper and you promise it, um, they're
Speaker 1: gonna hold you to it. And so on some level, yes,
Speaker 1: Elon Musk has a has a larger than life presence,
Speaker 1: but that also has a countervailing effect that the Delaware
Speaker 1: courts might have an opportunity to say, even for this person,
Speaker 1: we're going to hold into his agreements. Fascinating. Well, I'm
Speaker 1: sure there will be many more twists and turns between
Speaker 1: now and October. Eric Talley, Columbia Law School Professor, thank you,
Speaker 1: as well as our very own Kurt Wagner, who has
Speaker 1: a day in Delaware court in October. A newly released
Speaker 1: memo is raising alarm about competitive practices in Silicon Valley
Speaker 1: and helping to shape regulation. An internal document prepared for
Speaker 1: Mark Zuckerberg by Facebook executives, now released by the House,
Speaker 1: reveals the company is more worried about threats from its
Speaker 1: own products like Instagram and What'sapp then threats from rivals.
Speaker 1: This memo has helped lawmakers put together the American Innovation
Speaker 1: and Choice Online Act that would curb some of Meta's powers.
Speaker 1: Here to discuss Bloomberg's Lee and Nilan who covers regulation
Speaker 1: in washing too, and so Lea tell us exactly what
Speaker 1: was in this memo and why it matters. Yeah, So
Speaker 1: this memo was written in twenty eight keen by a
Speaker 1: senior data scientist and economist at Facebook, Thomas Cummeningham, and
Speaker 1: he actually analyzed the ways in which Facebook's own products
Speaker 1: compete with each other, So the ways in which Instagram
Speaker 1: and Facebook compete against each other, the ways in which
Speaker 1: Facebook Messenger and What'sapp compete against each other, and how
Speaker 1: um those were growing or shrinking. And that was really
Speaker 1: interesting because this entire memo is about how Facebook's own
Speaker 1: products are really cannibalizing each other and seen as like
Speaker 1: the biggest competitors against Facebook's main product instead of any rivals.
Speaker 1: There aren't that many external companies that are even mentioned
Speaker 1: in this memo, you know, like YouTube gets a very
Speaker 1: small shout out, Apple's I message gets a very small
Speaker 1: shout out. TikTok isn't even mentioned in here, and that
Speaker 1: was what is so was so interesting to house investigators
Speaker 1: is it's sort of backs up the idea that Facebook
Speaker 1: had bought these properties to sort of extend its monopoly
Speaker 1: in social networking. So what's the impact that this memo
Speaker 1: could have on pending regulation and impact essentially on Facebook's
Speaker 1: laws that Facebook is ultimately potentially going to have to
Speaker 1: abide by. Yeah, so Congress right now is considering this legislation,
Speaker 1: the American Innovation and Choice Act, that would prevent some
Speaker 1: of the big tech platforms like Facebook from self preferencing,
Speaker 1: so giving advantages to its own products over those of rivals.
Speaker 1: So one thing that Facebook does, for example, is make
Speaker 1: it really easy to cross post between Facebook and Instagram,
Speaker 1: right this legislation would force them to make it easier
Speaker 1: for other platforms to also cross post to their own
Speaker 1: to their social networks. Um, this UH legislation has advanced
Speaker 1: in both the House and the Senate, but it still
Speaker 1: needs a floor vote, and so there's been a lot
Speaker 1: of pressure um in the Senate and for particular, for
Speaker 1: this to come up for a vote before the August
Speaker 1: recess and lawmakers sort of leave for the month and
Speaker 1: then when they come back they really are focused on
Speaker 1: the November elections. So this is seen as like the
Speaker 1: really large and last window for Congress to actually act
Speaker 1: on the NHS legislation if something is going to happen
Speaker 1: this year quickly any response from Facebook about this, I
Speaker 1: mean Facebook is actually the one that handed over the
Speaker 1: memo to the House in the first place. Yeah, they said,
Speaker 1: you know this is old news, this is from you know,
Speaker 1: the landscape has shifted since then. They do like to
Speaker 1: bring up now you know that TikTok Is is a
Speaker 1: very emerging rival, and um, you know they think that
Speaker 1: there's still a lot of competition in the social networking space.
Speaker 1: All Right, something will continue to follow Bloombergs Leon Nilan,
Speaker 1: thank you for that context. Welcome back to bloomber Technology
Speaker 1: and Emily changing in San Francisco. I want to get
Speaker 1: back to our top story, and that is Netflix share
Speaker 1: still jumping after hours after the streaming giant reported lower
Speaker 1: a lower than expected loss in subscribers in the second quarter,
Speaker 1: but the forecast still slower than expected recovery in the
Speaker 1: current quarter. Ross Gerber, CEO of Gerbert Kawasaki, joins us. Now, Ross,
Speaker 1: do you like what you see? I know you're a
Speaker 1: big Netflix holder, but here we are having lost another
Speaker 1: million subscribers. Well, yes and no, I mean obviously losing
Speaker 1: subscribers is not a great headline, but you have to
Speaker 1: look at it in the context of obviously rising prices
Speaker 1: in the United States and the fact that they don't
Speaker 1: have a way to monetize people who don't want to pay,
Speaker 1: which is turns out about people who watch Netflix don't pay,
Speaker 1: and that's really why I think people are so bullish.
Speaker 1: Is the strategy that Netflix is going to be employing
Speaker 1: to get these people to pay is a two pronged
Speaker 1: strategy that I think will be very effective. One is
Speaker 1: the ad supported tier, which I think is a wonderful
Speaker 1: opera tunity to address a global market if you're an
Speaker 1: advertiser and a very engaged audience. So as an advertiser myself,
Speaker 1: I would definitely put ads on Netflix, and then secondly
Speaker 1: um from getting some add on sub revenue from the
Speaker 1: people who use their mom's accounts. So you know, essentially
Speaker 1: this is a wake up call to millennials across America
Speaker 1: that they're going to have to watch ads if they
Speaker 1: don't want to pay for Netflix or their mom can
Speaker 1: pay another couple bucks a month. But the days of
Speaker 1: free streaming are definitely over for Netflix. What's your take
Speaker 1: on their content spending strategy. Yes, there are huge hits,
Speaker 1: they spend a lot on those hits, But it seems
Speaker 1: like Netflix makes a lot of stuff. Well, when you're
Speaker 1: serving the world, essentially, you have a huge audience to
Speaker 1: make happy, you know, so like a lot of content
Speaker 1: they make is really for niche audiences one way or
Speaker 1: another that they're trying to serve all throughout the world.
Speaker 1: But you have to look at it from this, you know,
Speaker 1: like how much goes out and how much comes in
Speaker 1: versus and what they get for what they're spending. And
Speaker 1: I think one of the things in the report that
Speaker 1: I found really interesting was the fact that Netflix is
Speaker 1: now getting to a point where they're amortizing the same
Speaker 1: amount as they're spending on content, and they used to
Speaker 1: spend a lot more than they're amortizing, And so what
Speaker 1: we're really getting out of their financials there's a real
Speaker 1: number of profitability on the content spend that they have.
Speaker 1: So if any group of people that I trust spending
Speaker 1: content is the group of people at Netflix. They just
Speaker 1: make amazing content and they have a great team. Now,
Speaker 1: obviously valuations have dropped out there, and I wonder what
Speaker 1: you think about M and A could Netflix potentially acquire
Speaker 1: some you know, new capabilities here. What about a Roku
Speaker 1: or a theater chain. Well, I was kind of pushing
Speaker 1: towards the theater chain idea because I love putting Ryan
Speaker 1: Reynolds movie in the theater, which I think it could
Speaker 1: generate a hundred million plus that Netflix isn't going to
Speaker 1: get and as a user, I would wait another two
Speaker 1: weeks to watch it on Netflix. You know, it wouldn't
Speaker 1: matter to me. So, you know, it makes me sad
Speaker 1: they're not moving that action. But I'm I'm in the
Speaker 1: gaming business too, and they're moving towards gaming, and their
Speaker 1: partnered with Microsoft, which is one of our top holdings
Speaker 1: in my fund g K and as well as Netflix.
Speaker 1: So I'm really happy with Microsoft and Netflix moving into
Speaker 1: the gaming area together. If you look at the way
Speaker 1: Disney is monetized i P at Marvel, that's what Netflix
Speaker 1: is really thinking about in their futures. How do we
Speaker 1: monetize our i P better? How do we get more
Speaker 1: revenue dollars per user? Maybe it's live events, and we
Speaker 1: saw that with the Netflix comedy specials, which were actually
Speaker 1: live events that Netflix sold tickets to but then put
Speaker 1: on the platform as well, so I think that's really
Speaker 1: the thinking they're Um, we're a very big company with
Speaker 1: lots of subscribers, and we still want to grow, but
Speaker 1: there's a huge amount of revenue and profits. We have
Speaker 1: a tapped from this audience that they're really focused on,
Speaker 1: and I think that approach is really, you know, attractive
Speaker 1: to me as a sharehold. I also want to ask
Speaker 1: you about Tesla and Twitter. I know you're a big
Speaker 1: Tesla holder. As I understand it, you held Twitter until
Speaker 1: Elon must decide and he wanted to pull out of
Speaker 1: the deal. Now we're seeing this judge fast track the
Speaker 1: trial as Twitter wanted them to do, and there are
Speaker 1: certainly signs that this Delaware court could force Elon Musk
Speaker 1: to do the deal. What's your take. I'm not a lawyer,
Speaker 1: so I just want to say I have a pretty
Speaker 1: good understanding of law. But but I'm not a professional lawyer.
Speaker 1: But my take on this, and I've spoken to many
Speaker 1: legal people about this as well, and my own experience
Speaker 1: in watching mergers over my life, is that Elon has
Speaker 1: made a big mistake and this is a mess. You know,
Speaker 1: there was a material effect on Twitter and you can't
Speaker 1: deny it, and pulling out of this deal has severely
Speaker 1: damaged Twitter and and you know, their future, so I
Speaker 1: you know, I think Ellen is at risk to potentially
Speaker 1: losing billions of dollars and damages. But I don't see
Speaker 1: a court forcing a person to run a company they
Speaker 1: don't want to run. I mean, that's not really the
Speaker 1: solution to this. Twitter has been damaged, and the question
Speaker 1: is whether they find that damn is to be Elon's
Speaker 1: fault or not because of the information that he received
Speaker 1: from Twitter, which no question was questionable. But in my mind,
Speaker 1: they had a merger agreement and and he breached it,
Speaker 1: and it's going to be a costly encounter for Elon.
Speaker 1: I think doesn't damage Tesla too, I mean, doesn't make
Speaker 1: you concerned as a Tesla shareholder. No, it's a real
Speaker 1: positive for Tesla that he's not going to be the
Speaker 1: CEO of Twitter. I mean, you know, as much as
Speaker 1: yet he's not going to be the CEO of Twitter.
Speaker 1: I can tell you that. I mean, he doesn't want
Speaker 1: anything to do with it. That's the bottom line. He's
Speaker 1: gonna lose billions of dollars, which he knows very wealthy man,
Speaker 1: so he'll survive. But from a Tesla perspective. Tesla's in
Speaker 1: massive growth mode right now. I mean, it couldn't be
Speaker 1: a better environment to sell electric vehicles, and they got
Speaker 1: two brand new factories and ramp mode at the same time.
Speaker 1: His focus needs to be on Tesla right now because
Speaker 1: the next twelve months, the eighteen months are the most
Speaker 1: consequential months for Tesla's future that I've seen in the
Speaker 1: eight years i've been an investor in Tesla. So so
Speaker 1: I'm I'm you know, happy that I mean, this is
Speaker 1: still a waste of time, and it's still distracting, but
Speaker 1: I'm happy he's not gonna end up being CEO of Twitter,
Speaker 1: and hopefully he'll learn his lesson and really focus on
Speaker 1: what he's done great, which is Tesla, and and I
Speaker 1: think that's what he's learned. Well, stranger things have happened, Ross,
Speaker 1: and I'm going to keep using that pun. Ross Kerberg
Speaker 1: or Wakawasaki CEO. Always great to have you, Thank you, Okay.
Speaker 1: Coming up, calls for clear crypto regulation are getting louder,
Speaker 1: but SEC chair Gary Gensler says there are laws in
Speaker 1: place and crypto platforms aren't coming forward. Well on that, next,
Speaker 1: Mrs Bloomberg there's a lot of non compliance, meaning like
Speaker 1: if you raise money from the public and and that
Speaker 1: public is anticipating based on your efforts, UH, some profit
Speaker 1: that comes into the securities laws. We at the SEC
Speaker 1: are going to do what we can. But right now
Speaker 1: there's far too many of these platforms that haven't come
Speaker 1: in uh to basically comply with the law and register.
Speaker 1: When you look back, there was very little self regulation. Uh.
Speaker 1: There was inane risk management where companies took massive leverage,
Speaker 1: took asset liability mismatch, which means they had short term
Speaker 1: deposits they lent them out long. I mean, those are
Speaker 1: the two ways people always go bankrupt. Galaxy Digitals, Mike
Speaker 1: novograts they're saying crypto companies might have needed to better
Speaker 1: self regulate. He was at the Bloomber Crypto summer earlier
Speaker 1: in New York, along with coin bases out of the
Speaker 1: US policy. Cara Calvert, who joins US now to unpack
Speaker 1: it all, also look a couple of competing narratives here, Kara.
Speaker 1: One that there is regulation, this according to the Chair
Speaker 1: of the SEC former Chair of the SEC, but that
Speaker 1: companies aren't listening, aren't coming forward. What do you think
Speaker 1: well a coin base. We actually have really founded ourselves
Speaker 1: and pride ourselves on and on being compliant on being
Speaker 1: the trust and most secure, and so we are regulated
Speaker 1: by more than forty two state forty two state licenses.
Speaker 1: We have a bit license, we have a trust charter,
Speaker 1: so we actually view ourselves as very well regulated. We
Speaker 1: are regulated at the federal level by CFTC, by the SEC.
Speaker 1: We have a dormant broker dealer license. Two of them
Speaker 1: actually were regulated by SINS and so we actually think
Speaker 1: that there is a regulatory framework in place that is
Speaker 1: that is pretty effective. But we think really what we
Speaker 1: need to do is make sure that we modernize those
Speaker 1: rules and bring them into into a space that can
Speaker 1: really and truly understand the technological capabilities of blockchain and
Speaker 1: digital assets and actually help consumers achieve and understand those benefits. So,
Speaker 1: if those rules were modernized, do you think that the
Speaker 1: spectacular crash we've just seen could have been avoided? The
Speaker 1: collapse of you know, a major crypto hedge fund, a
Speaker 1: major crypto lender, could have been avoided. I think it's
Speaker 1: difficult to predict what may have happened, but I do
Speaker 1: think that there certainly if we had clear rules of
Speaker 1: the road for all different types of the all different
Speaker 1: companies engaged in the crypto ecosystem. We certainly would have
Speaker 1: more clarity where it comes to disclosures or um certain
Speaker 1: requirements on how on you know, how you may address
Speaker 1: different business risks or different needs. What we saw through
Speaker 1: the recent volatility is that the issue is really a
Speaker 1: credit problem, not a crypto problem. And so what we're
Speaker 1: hoping for again is these consistent rules that will help
Speaker 1: consumers understand what they're getting into when they have crypto,
Speaker 1: and that you have businesses and and innovators and new
Speaker 1: projects that can come to the table and instead of
Speaker 1: hiring a team of lawyers to comply with what can
Speaker 1: be considered some vague rules, and so they can go
Speaker 1: out and innovate and create the next big thing for consumers.
Speaker 1: There's a crypto bill being pushed by Senators Lummis and
Speaker 1: Jilla Brand. I actually recently spoke with both of them
Speaker 1: about the bill and why they think this could be
Speaker 1: the answer to take a listen to this from Senator Lamas.
Speaker 1: The bill in one piece, as a total bill is
Speaker 1: more likely to be deferred until next year. Uh, it's
Speaker 1: a it's a big topic, it's comprehensive, and it's still
Speaker 1: new to many U S. Senators. Do you like this
Speaker 1: legislation and do you think it will pass? I'm so
Speaker 1: really glad you yus this legislation for two reasons. One,
Speaker 1: I'm from the great state of Wyoming, so i hold
Speaker 1: all the work that Senator Lamas is doing very near
Speaker 1: and dear to my heart, and so does my grandmother,
Speaker 1: who turns on her and two and still lives there.
Speaker 1: She she very much believes in it. So I really
Speaker 1: appreciate Senator lemass work for the Cowboy State. Second, this
Speaker 1: bill is by far and away the most comprehensive, detailed.
Speaker 1: Really the intellectual rigor that was put into building it
Speaker 1: is really impressive, and I think it will create very
Speaker 1: much a foundation for for future legislation. And I think
Speaker 1: she's right that at the end of the day, legislation
Speaker 1: can take a very long time to get across the
Speaker 1: finish line. And this is very complex. Her bill includes
Speaker 1: CFCC juristiction sec juristiction, tax reform, it includes UM sections
Speaker 1: on stable coins. It's very complex and putting this puzzle
Speaker 1: together will take time. A lot of different committees leadership,
Speaker 1: It will take the administration. So once we get all
Speaker 1: these pieces together, I do think we're set up for
Speaker 1: success in the coming year. Coin Base is very much
Speaker 1: aspiring to be a global company, and cryptos, you know,
Speaker 1: certainly a global market. Are other companies, excuse me, other
Speaker 1: governments doing this better than the US or are they
Speaker 1: ahead of the US on regulation? Some of the countries
Speaker 1: actually are, I think ahead of where the U S is.
Speaker 1: And part of that is is by just by by
Speaker 1: nature of the fact that they may be set up
Speaker 1: with a with a single regulator, for example in the
Speaker 1: UK or in in this instance of EU, they're actually
Speaker 1: putting forward a very comprehensive approach to digital assets. We're
Speaker 1: seeing additional work in India, in Singapore, and Japan and Australia,
Speaker 1: so they're a lot of different countries that are coming
Speaker 1: to the table and working with stakeholders and industry participants
Speaker 1: and consumers to understand what the impact of digital assets are.
Speaker 1: I think that's where we need to get in terms
Speaker 1: of the United States, is really creating a rulemaking process
Speaker 1: and going through a regulatory process that's transparent, that is
Speaker 1: engaging stakeholders. It's thinking about both retail and institution and
Speaker 1: really how we can move for in a way that's
Speaker 1: really includes all of the different viewpoints. That's what we're
Speaker 1: missing in the United States right now. Alright, Coin based
Speaker 1: head of US policy Karat Calibert, thanks for giving us
Speaker 1: your view. In this week's Teconomics, Controlling a computer with
Speaker 1: your brain. This might sound like something out of a
Speaker 1: sci fi movie, but the technology already exists, and for
Speaker 1: the first time, a brain computer interface device has been
Speaker 1: implanted into the brain of a US patient. Sanchron is
Speaker 1: the company that makes it, and its founder Tom Arksley
Speaker 1: joins us now with more So, who is this patient
Speaker 1: and why did they decide to do this? Tom. We're
Speaker 1: not talking too much about the patient, Emily out of
Speaker 1: his respect for privacy, but I can say it's a
Speaker 1: patient that has a severe paralysis due to a LS
Speaker 1: and he is not able to use his hands, he's
Speaker 1: not able to speak, and he depends on assistive technologies
Speaker 1: to communicate with his family and friends, and he's looking
Speaker 1: for a way to improve that capability. So how will
Speaker 1: this implant help him? The concept with a b c
Speaker 1: I is essentially the idea that we have become dependent
Speaker 1: on digital devices to engage with the world that there's
Speaker 1: a part of the brain that controls our fingers. We
Speaker 1: use our fingers to do point and click. And if
Speaker 1: we can go straight to the source in the brain
Speaker 1: that controls the intention to do point and click, put
Speaker 1: a sensor in there. You can decode the information out
Speaker 1: of the brain and then control point and click without
Speaker 1: the need for your hands. Do that comes ditically from
Speaker 1: the brain. What are you hoping to learn from this
Speaker 1: patient's experience? This has been a long journey the we
Speaker 1: became the first company to get a IDEA approval from
Speaker 1: the FDA to conduct the study of a permanently implanted
Speaker 1: b c I. We're still primarily focused on safety, but
Speaker 1: we're now starting to test out the how we measure efficacy.
Speaker 1: So the FDA has publicly stated that it's not obvious
Speaker 1: how we would quantify the effectiveness of the b c I,
Speaker 1: and we're starting to test out some of those parameters
Speaker 1: with a view towards preparing that packet for FDA approval
Speaker 1: and then going to commercial launch. Now, as I understand it,
Speaker 1: your technology is ahead of what Elon Musk has accomplished
Speaker 1: so far at Neuralink. How how much farther ahead, and
Speaker 1: how is what you're trying to do different than what
Speaker 1: he is trying to do. I would say we're at
Speaker 1: the beginning of a renaissance of brain science, and I
Speaker 1: think this is going to be a huge problem that's
Speaker 1: solved for many, many patients, and there are many ways
Speaker 1: to try to solve the problem. The way that we're
Speaker 1: doing it is going into the brain through the blood vessels.
Speaker 1: Were on a particular path with FDA, and we've been
Speaker 1: able to leverage decades of knowledge around safety of leaving
Speaker 1: devices in blood vessels um and the way that we
Speaker 1: can expect the body to react to that. So it's
Speaker 1: a different approach. It's a big problem, and I think
Speaker 1: there are going to be many approaches needed. But we're
Speaker 1: excited to be finally getting into the clinical stage in
Speaker 1: the US, after you know, five years of discussion with
Speaker 1: FDA and demonstration of safety and testing about our technology.
Speaker 1: So who do you imagine we'll be doing this in
Speaker 1: the nearer term future and in the longer term future.
Speaker 1: Is this something that you see anyone opting to do well?
Speaker 1: I think paralysis is a massive problem. We probably all
Speaker 1: know someone who's lost the ability to use their hands, strokes,
Speaker 1: spinal cord injury, als, muscular distribute multiple sclerosis, um many
Speaker 1: condition and make our body ineffective while our brain is
Speaker 1: still working. So our big focus is to show that
Speaker 1: this technology is effective for the for a patient population initially,
Speaker 1: and I think the way I think about where this
Speaker 1: technology is going, it's going to be something like lasic.
Speaker 1: It's an elective procedure. It helps you engage with technology more,
Speaker 1: you reconnect with the world, you overcome physical disabilities, and
Speaker 1: you re establish a digital um digital your digital world.
Speaker 1: So you think that in the future, putting a device
Speaker 1: inside your brain will be as easy and simple and
Speaker 1: desirable as getting lasic eye surgery. Well, lasic eye surgery
Speaker 1: is a minor procedure, still a laser on your eyeball.
Speaker 1: It comes with risk, and it takes a couple of hours.
Speaker 1: It's in a day procedure unit. That's the type of
Speaker 1: position that are putting in stents and pacemakers are using
Speaker 1: the same technology that would be putting in a brain
Speaker 1: computer interface if it goes through the blood vessels. So
Speaker 1: that's a cat lab and they thousands of them across
Speaker 1: the country, tree with many many physicians who can perform
Speaker 1: the procedure. It's a day procedure. It's invisible to the
Speaker 1: outside world, and it helps you reconnect and it offsets
Speaker 1: our you know, all of the things that come with
Speaker 1: the human body that can fail for a number of reasons.
Speaker 1: Absolutely fascinating. I understand you've done this a handful of
Speaker 1: times in Australia to date, but your first US patient
Speaker 1: now has a syn chron brain implant. We'll we'll keep
Speaker 1: following your progress, Tom Sinn Chrong founder Tom Oxley, thank
Speaker 1: you for joining us. That does it for this edition
Speaker 1: of Bloomberg Technology. Don't forget to check out our podcast.
Speaker 1: You can find it wherever you get your podcast. As always,
Speaker 1: I'm Emily Changing in San Francisco. This is Bloomberg