Speaker 1: From the heart of where Innovation, money and power callive
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily jay I made Ludlow in New York in family
Speaker 1: chang This is Bloomberg Technology. Coming up in the next hour.
Speaker 1: A Bloomberg report about Apple's plans to scale back iPhone
Speaker 1: production sends the stock down by as much as four
Speaker 1: point six pc. The company planned to build an extra
Speaker 1: six million phones, but the extra demand never materialized. We'll
Speaker 1: have the details in a moment. Plus, Amazon devices get
Speaker 1: a facelift and a good night's rest. The company unveiled
Speaker 1: a bedside sleep tracker, as well as a new Kindle,
Speaker 1: updated ring cameras, and echo products. I'll discuss with Amazon
Speaker 1: Senior VP of Devices and so cause, Jeremy Alaire talks
Speaker 1: about the latest announcements from their Converge twenty two conference,
Speaker 1: including its new partnership with Robin Hood. Bloomberger has learned
Speaker 1: Apple is backing off plans to increase production of its
Speaker 1: new iPhones this year. The company had expected a surge
Speaker 1: in demand, but that hadn't happened, according to sources. Bloomber's
Speaker 1: Mount German joins me from l A with the details. Mark,
Speaker 1: what is our latest reporting on what's going on? So
Speaker 1: for two, Apple set out to build and sell through
Speaker 1: ninety million new iPhone fourteen units. That's across the four models,
Speaker 1: the fourteen, the fourteen plus, the Pro, and the Pro Max.
Speaker 1: But recently they sort of had this extra credit idea
Speaker 1: I'll call it for an extra six million phones on
Speaker 1: top of that ninety million. But like you said, that
Speaker 1: extra six million no longer necessary because the concerns about
Speaker 1: that extra demand not happening in two. I would say
Speaker 1: that probably has to do with some recession pressures inflationary
Speaker 1: pressures as well. That people are experiencing the iPhone fourteen
Speaker 1: and fourteen plus not significant upgrades over the thirteens, but
Speaker 1: the pros that's where the big upgrades are. That's what
Speaker 1: people want to buy. So I think people are holding
Speaker 1: off on buying the phone until they're able to buy
Speaker 1: that fourteen Pro or Pro Max for when it makes
Speaker 1: sense for them to upgrade to those price here and
Speaker 1: quite frankly far better versions of the device market. Seems
Speaker 1: to be some evidence some data that consumers around the
Speaker 1: world of going to the higher price point pro. What
Speaker 1: have we learned about early demand. Yeah, early demand tells
Speaker 1: us that the iPhone fourteen Pro and particularly iPhone fourteen
Speaker 1: Pro Max, that's where it's at this year. People want
Speaker 1: those devices. If you just look at on your over
Speaker 1: year level, the move from the iPhone thirteen to the
Speaker 1: fourteen and the non Pro models extremely minimal. I would
Speaker 1: say the thirteen to the fourteen smallest upgrade in the
Speaker 1: iPhone's history, but Pro to Pro very big upgrade. Fort
Speaker 1: makeapixel camera on the back, the dynamic island system that
Speaker 1: you're showing on the on the on the screen right now.
Speaker 1: The satellite connectivity is available on both models, but some
Speaker 1: of those video upgrades, those are all on the Pro models,
Speaker 1: and so I think that's what people really want to
Speaker 1: hold out for. If you look at the Apple online store,
Speaker 1: you can see in particular there the shipment delay times
Speaker 1: for the Pro models far longer than the regular models.
Speaker 1: That's a very good indicator of demand. Also, this is
Speaker 1: not an exaggeration. You go to an Apple store, there
Speaker 1: have been lines around the block for days still for
Speaker 1: the Pro Models. You ask people which phone are you
Speaker 1: here to line up for? You ask fifty people, I
Speaker 1: would say, maybe forty eight or forty nine of them
Speaker 1: are there for the pro phones, not the regular fourteen
Speaker 1: all right, thanks to bloombugs Matt Gum and I want
Speaker 1: to stick with this story and bring in forest to research.
Speaker 1: Vice president Julie asked, Julie, this is interesting because no
Speaker 1: matter what the environment, people buy iPhones around the world.
Speaker 1: What's your read on what bloombug reported over overnight? Yes,
Speaker 1: thank you. So I think there's a number of factors.
Speaker 1: So I think the first one is always you know,
Speaker 1: we know that Apple's iPhone owners and buyers are more
Speaker 1: affluent than the of and Android. Even if you just
Speaker 1: look in the U S alone, the average household income
Speaker 1: of an iPhone owner is eighty eight thousand dollars versus
Speaker 1: seventy nine for Android. UH. Thirty two percent of households
Speaker 1: that own an iPhone have a household income of more
Speaker 1: than a hundred thousand dollars a year. For Android, that's
Speaker 1: twenty three percent. UH. And final point there is, if
Speaker 1: you look at households with an income of over three
Speaker 1: thousand dollars annually, three percent for the iPhone and only
Speaker 1: one percent for Android. So I think that's you know,
Speaker 1: the top of the list. We know, and there's a
Speaker 1: lot of data that shows that simply iPhone owners are
Speaker 1: more affluent than those that are purchasing an Android. I
Speaker 1: think the second thing that comes into the mix is
Speaker 1: the upgrade cycle. Last year and this year has been
Speaker 1: an interesting time because a lot of carriers shut down
Speaker 1: three G and they forced an upgrade. So when we
Speaker 1: look at our data across the United States and Europe,
Speaker 1: anywhere from twenty five of consumers have purchased an iPhone
Speaker 1: in the past year, and I think it's a really
Speaker 1: substantial number, especially when you take into account that iPhone
Speaker 1: represents under fifty percent of share in each of those
Speaker 1: market once you get outside of the United States. And then, finally,
Speaker 1: to echo what Mark was saying, you know, when we
Speaker 1: look at it, we talked to our consumers. Six one
Speaker 1: of consumers expect that a recession is coming, and so
Speaker 1: they are slowing spending. We've got thirty of US online
Speaker 1: adults saying we are going to spend less on electronics
Speaker 1: in the upcoming year. So there's a little bit of
Speaker 1: hesitation in the market um and consumers are pulling back
Speaker 1: on spending. Julie, we love having you on because you
Speaker 1: crunch the numbers. Let's take a step back, let's zoom
Speaker 1: out here. A lot of cell siders seem to be saying, well,
Speaker 1: I was always modeling nine units anyway, So what's changed. Yeah,
Speaker 1: I think it's it's hard to say, you know what,
Speaker 1: you know, the analysts were modeling. I think it's um.
Speaker 1: You know, certainly, there's always good reasons to think about
Speaker 1: why they could have grown the market. Um, certainly. You know,
Speaker 1: for example, one of the things that we know that
Speaker 1: if of consumers who buy Apple products only buy Apple products.
Speaker 1: So if they're buying a watch, if they're buying a tablet,
Speaker 1: if they're signing up for Apple one, they're more likely
Speaker 1: to be a smartphone owner, you know, an io as
Speaker 1: smartphone owner. So you know, it's fair to expect that
Speaker 1: Apple could have you know, predicted that they would have
Speaker 1: converted more Android users this year. And they've also got
Speaker 1: a very deep lineup that's capable of doing that and
Speaker 1: competing at lower price points. So again, I don't know
Speaker 1: what was going on when they did the end when
Speaker 1: they did the forecast, but there's you know, you know,
Speaker 1: six millions not a big number on top of ninety.
Speaker 1: You know, it's it's more than it's more than five,
Speaker 1: but it's not Demper said, it's not a big number.
Speaker 1: When we talk about global technology the prospects of a recession,
Speaker 1: we're trying to look for clues, right of what's happening
Speaker 1: with the global consumer. What do you see broadly in
Speaker 1: the smartphone market globally? Are their markets where the consumers weak?
Speaker 1: Are they're spending habits that are changing? Yes, so I think,
Speaker 1: you know, certainly when we look at the numbers and
Speaker 1: we're talking to consumers, where are you you know what
Speaker 1: concerns you write? Food is more expensive, you know, rents
Speaker 1: are up all right, Right, there's a few categories you
Speaker 1: know that I would say are certainly more essential than
Speaker 1: having the latest and greatest smartphone. Um but again, like
Speaker 1: you know, keep in mind, you know, the upgrades, like
Speaker 1: these phones are amazing, amazing feats of engineering. There are
Speaker 1: amazing devices, whether it's an iPhone device or it's you know,
Speaker 1: one of the latest Android devices. Consumers are hanging onto
Speaker 1: these vices for you know, two, three, four years, and
Speaker 1: so that we saw consumers in United States buy an
Speaker 1: iPhone in the last twelve months is astounding on its own,
Speaker 1: and so that also could be contributing to a little
Speaker 1: bit of softer demands at you know, all of the
Speaker 1: price points as we go into the end of all right,
Speaker 1: forest to Research Vice President Julie Arsk, Thank you very much.
Speaker 1: Coming up Amazon's ambient intelligence, how the company is looking
Speaker 1: to a more personalized and proactive future in its devices.
Speaker 1: Our conversation with Amazon's Dave Limp. Next, This is Bloomberg.
Speaker 1: On Wednesday, Amazon held its full Hardware event, where announced
Speaker 1: a bunch of new gadgets. I caught up with Dave Limp,
Speaker 1: amazon senior vice president for Devices and Services, right after
Speaker 1: the event and also about the company's strategy. With so
Speaker 1: much competition in the space, what we're trying to do
Speaker 1: is build devices and services that mostly focused on the home,
Speaker 1: although increasingly in the car. That follow the pattern of
Speaker 1: what we call ambient intelligence, which is the ability for
Speaker 1: devices to be very very useful to customers when they're
Speaker 1: in the foreground and when they need it, but when
Speaker 1: you're not using it, they kind of disappear in the background.
Speaker 1: And when we're doing when we're at our best, we're
Speaker 1: allowing customers to pick their heads up, enjoy the real world,
Speaker 1: enjoy their families, and let technology help that rather than
Speaker 1: being you know, absorbed in their phones or out in
Speaker 1: some metaverse somewhere. With inflation such as it is around
Speaker 1: the world, higher input costs. How conscious a decision was
Speaker 1: that with pricing to not raise prices with certain product lines.
Speaker 1: I think we're always trying to you know, since the
Speaker 1: very beginning, our first Kindle, we've we have fifteen years ago,
Speaker 1: we've tried to make our products as affordable as possible,
Speaker 1: you know. We our strategy has been the same since
Speaker 1: the very beginning, which is we want to make money
Speaker 1: when customers use their products, not necessarily when they buy them.
Speaker 1: And so uh, we we are obviously looking always looking
Speaker 1: at commodity costs. But but part of the ability to
Speaker 1: pass on that value to customers is that the businesses
Speaker 1: at a scale where we can buy in volume and
Speaker 1: and we want to give that value back to customers
Speaker 1: wherever possible. You mentioned the Kindle. It's a bit of
Speaker 1: a throwback, right, the first Amazon device, and you've added
Speaker 1: a stylus interesting products. What's the strategy with that. Do
Speaker 1: you think that this is going to be a volume seller? Well,
Speaker 1: Kindle Scribe is in some ways, it's the Kindle we've
Speaker 1: always wanted to build, you know, and we have some
Speaker 1: great kindles we just announced some last last two weeks
Speaker 1: ago that are at but this one, as you mentioned,
Speaker 1: it's the first kindle you can write on, and it
Speaker 1: has a ten point three inch display that's incredibly high resolution.
Speaker 1: I but also as a stylist, and one that doesn't
Speaker 1: have a battery. You don't have to sink. It just works.
Speaker 1: And when write on Kindle Scribe, it really does feel
Speaker 1: like you're writing on paper. It's something that's amazing. You
Speaker 1: kind of have to try it to see it. And uh,
Speaker 1: you know, I never try to predict volumes. Uh. What
Speaker 1: we try to do is build great products and let
Speaker 1: customers speak for themselves. I know for sure that I
Speaker 1: will be buying one of these, You'll be buying one.
Speaker 1: But around the world that the consumer is feeling pain
Speaker 1: and at the same time there's evidence that consumer is
Speaker 1: all still spending at the higher end of the market.
Speaker 1: What are you saying in the markets that you operate
Speaker 1: in and the spending habits of consumers where they are
Speaker 1: putting cash awar to holding back. Yeah, obviously, we our
Speaker 1: first signal was a couple of months ago with Prime Day.
Speaker 1: We had we had a good Prime day. For my
Speaker 1: part of Amazon's business, we uh. I think customers tend
Speaker 1: to look for value in times when the economy is tougher.
Speaker 1: It's hard to predict what's going to happen as we
Speaker 1: go into queue four. There's no question that there is
Speaker 1: tightening in the economy. Um, But I think what the
Speaker 1: best thing we can do is get our inputs right
Speaker 1: and build products that we think customers are gonna love.
Speaker 1: Price them, as you mentioned earlier, crisply so that they're affordable,
Speaker 1: and then you know the rest is going to be
Speaker 1: up to up to the consumer. But I have I'm
Speaker 1: internal optimists, but I have a high level conviction there's
Speaker 1: going to be a lot of echoes and kindles and
Speaker 1: other products under people's trees this year. The deal with
Speaker 1: I Robot, I think we've got used last week that
Speaker 1: the FTC has made a second request for additional information.
Speaker 1: How optimistic are you that deal gets done and how
Speaker 1: important is I Robot. Well, obviously we have to go
Speaker 1: through approve the approval cycles around the world, and until
Speaker 1: we do get through, those will continue to operate at
Speaker 1: arm's length as separate companies. But you know, I wouldn't
Speaker 1: have ever kind of sat down with Colin, if we
Speaker 1: didn't have optimism that we could get the get the
Speaker 1: transaction done. Colin, who's the CEO of I Robot, is
Speaker 1: the kind of the most missionary entrepreneur, one of the
Speaker 1: most missionary entrepreneurs I've ever met, and I look forward
Speaker 1: to once we consummate the transaction to working with them
Speaker 1: even closer. You have really expanded the devices offering in
Speaker 1: recent years. There's so many product lines, product type. We
Speaker 1: didn't even get onto the new TVs um and some
Speaker 1: of the other devices aimed at kids. But all that
Speaker 1: makes me think about your manufacturing footprint print globally. Now
Speaker 1: let's talk semiconductors. You know, how is supply chain for you?
Speaker 1: How is manufacturing and how are access to key chips
Speaker 1: that you need to go into these devices. I think
Speaker 1: we're coming out at the other end of at least
Speaker 1: for the products that are under my purview, of the
Speaker 1: worst of the supply train crisis. I don't think it's
Speaker 1: by any means over We still see disruptions in the
Speaker 1: worldwide transportation network, especially if you're throwing things on ocean.
Speaker 1: UH and certain chip sets are still in shorter supply,
Speaker 1: but some of the more critical components, UH, you know,
Speaker 1: systems on a chip, the actual processors and our products.
Speaker 1: The supply looks brighter for them. When you look at
Speaker 1: UH display panels for things like tablets and TVs, that
Speaker 1: supply looks better than it did a year ago. So again,
Speaker 1: I don't think we're through it, but I can start
Speaker 1: seeing a light at the end of the tunnel. That
Speaker 1: was Amazon's Dave Limp. Let's stick with Amazon's product unvailing
Speaker 1: and bring in Tom Forte if d a Davidson Tom
Speaker 1: a lot of products, some of them are faceless, right
Speaker 1: upgrades to existing lines. Some of them are You did
Speaker 1: any of that move the needle for you? Sure? So
Speaker 1: when I think about their strategy, I think of them
Speaker 1: as the low cost or one of the low cost
Speaker 1: providers of hardware and the consumer electronics space. I think
Speaker 1: it's about time, and I think it should be a
Speaker 1: very popular product that they're adding a stylus to the Kindle.
Speaker 1: When I think of their different lines of consumer electronics products,
Speaker 1: Kindle's probably probably we're we would say Amazon is most dominant. Otherwise,
Speaker 1: when you think about a lot of their echo devices.
Speaker 1: The good news is that Amazon makes a lot of
Speaker 1: devices that leverage Alexa, but a lot of other consumer
Speaker 1: electronic companies do too, So I think when you think
Speaker 1: about the products that are leveraging Alexa, it isn't just
Speaker 1: what Amazon is doing on the Echo device line, but
Speaker 1: the fact that so many manufacturers think so Nos as
Speaker 1: an example, are making products integrated with Alexa. That's the
Speaker 1: important thing there. So that was kind of my initial
Speaker 1: take on their new hardware offering. And I'm fascinated at
Speaker 1: the Astro and I'm glad you talked to him about
Speaker 1: the i robot acquisition. So what is it about the
Speaker 1: roomba that attracted Amazon and why does it feel like
Speaker 1: it needed to make an acquisition there rather than extend
Speaker 1: what it's already doing with the Astro line up. The
Speaker 1: timing of this is interesting because we've just had news
Speaker 1: of a second Prime Day essentially next month. Do you
Speaker 1: expect consume is right now around the world to rush
Speaker 1: out and alot these Amazon devices? Yes and no. So
Speaker 1: so let's start with the second prime Day in one
Speaker 1: calendar year. So it's a long time student of Amazon.
Speaker 1: I remember when they had the first Prime Day and
Speaker 1: it was in July, and the reason was they wanted
Speaker 1: to test their logistics to see if they were ready
Speaker 1: for their big sales days Black Friday Cyber Monday. So,
Speaker 1: in my opinion, having two Prime days encounter is actually
Speaker 1: a sign of weakness. It means that they need a
Speaker 1: sale because their sales are not doing as well as
Speaker 1: they hope for. I also think they want to leverage
Speaker 1: their logistics to get as much of a return on
Speaker 1: that investment. So do I think investors or consumers rather
Speaker 1: will gobble up their consumer electronics devices at a second
Speaker 1: Prime Day? Generally speaking, they do well with Amazon devices
Speaker 1: on Prime Day, but as it pertains to the sales
Speaker 1: trends in general on the stock, I'm concerned that they're
Speaker 1: having two sales in one year. I think that's a
Speaker 1: negative sign. Tom. I wouldn't you give me an explanation
Speaker 1: of why we care about Amazon devices business. They price
Speaker 1: them competitively, right, But it seems to me the idea
Speaker 1: here is just to bring more people into Prime, more
Speaker 1: people using Alecta products. They're not actually so focused on
Speaker 1: making money through the hardware, are they. You know, they're
Speaker 1: definitely the opposite of Apple, where Apple makes the majority
Speaker 1: of its revenue from its hardware sales. For Amazon hardware
Speaker 1: is essentially an enabler. What can I give a consumer
Speaker 1: that will make it easier for them to buy products
Speaker 1: on Amazon? What can I give a consumer that will
Speaker 1: make it easier for them to watch videos on Amazon? So,
Speaker 1: in that regard, not the profit neutle mover. Certainly it
Speaker 1: is for Apple, but it can have a positive impact
Speaker 1: on their e commerce sales to the extent that everything
Speaker 1: they do makes it easier for the consumers to buy
Speaker 1: products through Amazon. Hey, Tom, really quickly, you were concerned
Speaker 1: about the mixed reception for Rings of Power. I've been
Speaker 1: watching Rings of Power. Have the episode so far changed
Speaker 1: your mind? Okay, So I'm publishing a note tomorrow where
Speaker 1: I'm gonna talk about how I essentially felt sleep in
Speaker 1: episodes one, three, and four, and have a much episode five. Yet,
Speaker 1: So with approval rating and written Tomatoes, I'm very concerned
Speaker 1: about the billion dollars investment been made. Tom Forte, harsh
Speaker 1: critic of d A. Davidson. Of course, thank you very much.
Speaker 1: Elon Musk asked a federal appeals court to throw out
Speaker 1: the deal he made with the SEC in eighteen over
Speaker 1: a so called Twitter sitter. Since a Tesla lawyer has
Speaker 1: screened all of Musque company related tweets. We believe after
Speaker 1: a tweet about taking Tesla private forced the SEC to act.
Speaker 1: Musk calls the Twitter Sitter agreement and a legal effort
Speaker 1: to muzzle him, adding that it's hindering his freedom of speech.
Speaker 1: A judge refused Musque's last plea to end the Twitter
Speaker 1: sist a deal back in April, and Tesla's did Joe
Speaker 1: Gibier as a board member. Gabier is the co founder
Speaker 1: of Airbnb and last fourteen years has helped launch Airbnb's
Speaker 1: design studio and airbnb dot org, the company's nonprofit foundation.
Speaker 1: He recently stepped back from his full time role in
Speaker 1: operations to pursue other ventures. Gibier replaces Larry Ellison on
Speaker 1: the board, and General Mills, the maker of Cinnamon Toast
Speaker 1: Crunch and Annie's Box Pastors, is backing food tech startup
Speaker 1: grub Market. San Francisco based grub Market has raised a
Speaker 1: hundred and twenty million dollars in new equity from General
Speaker 1: Mills and other investors, including Tiger Global, and a two
Speaker 1: billion dollar valuation. The startup offers software and an e
Speaker 1: commerce platform connecting farmers and key food suppliers with customers.
Speaker 1: Grub Market operates all across the US, South America, Asia, Europe,
Speaker 1: and Africa, and i p O could also be on
Speaker 1: the horizon with grub Market holding talks with underwriters. Bloomberg
Speaker 1: has reported this is Bloomberg Technology. I'm Ed Ludlow in
Speaker 1: New York. The popular messaging platform WhatsApp is more than
Speaker 1: just an encryptive messaging app connecting people worldwide. It's become
Speaker 1: a major part of Wall Street communication. That's why regulators
Speaker 1: reach settlements with a dozen banks for failing to monitor
Speaker 1: employees communications on on unauthorized messaging apps like WhatsApp. Wall
Speaker 1: Street has been hit with more than two billion dollars
Speaker 1: of fines and what's become called the WhatsApp investigation. Goldman Sachs,
Speaker 1: Bank of America and City Group were among those penalized.
Speaker 1: Bloomberg Street are Naturation is covering this story. Let's go
Speaker 1: back to the beginning. What is the activity and which
Speaker 1: apps are we talking about here? Again? And that's important
Speaker 1: because why we call it the WhatsApp problem. It's important
Speaker 1: that listeners understand that what we're really talking about is
Speaker 1: something that's dubbed or WhatsApp broke effectively, regulators want banks
Speaker 1: to ensure that they're monitoring all these messaging apps. They
Speaker 1: are worried about the unauthorized use of these apps. So
Speaker 1: WhatsApp is one prominent example, but it could be Signal,
Speaker 1: could be telegramed, it could be any one of these
Speaker 1: apps that have gotten pop so popular in recent years.
Speaker 1: A lot of the communication between bankers and traders, their
Speaker 1: clients just inside the film has gravitated to these platforms.
Speaker 1: But archiving these chats, monitoring these chats, and compliance has
Speaker 1: not kept pace with the growth and technology. There is
Speaker 1: this a pandemic story where we're all sort of at home,
Speaker 1: out of your office and communicating with each other in
Speaker 1: new ways. Or does it pre date that the pandemic
Speaker 1: is an accelerator for sure, But I think it's more
Speaker 1: of a technology story. You have just gotten used to
Speaker 1: the idea that people are just more comfortable using these
Speaker 1: apps to communicate. Even someone sitting two seats down from you,
Speaker 1: you're more likely to send them a message rather than
Speaker 1: pick up the phone and call them or email them.
Speaker 1: That's why there's so much focus on these apps. And
Speaker 1: of course the pandemic played a role because you had
Speaker 1: a disparate situation where everyone left the officers, the officers
Speaker 1: emptied out, and everyone is at home. And when you're
Speaker 1: at home, you're more likely to be more comfortable with
Speaker 1: the kind of apps you use anywhere when you're outside
Speaker 1: your usual eight to six schedule. These fines, seeing big,
Speaker 1: big numbers, why so hefty? It's extraordinary? Two billion dollars
Speaker 1: cost your mind. Eight years back, when Mark Zuckerberg wanted
Speaker 1: to buy WhatsApp, we were all scratching our heads as
Speaker 1: to why they would buy something like that for twenty
Speaker 1: billion dollars in two Now we're talking about a fine
Speaker 1: that cruise as much as two billion dollars that in
Speaker 1: some ways it's truly crazy, because the previous highest fine
Speaker 1: for something like this, which is effectively a record keeping laps,
Speaker 1: was fifteen million dollars one five for Morgan Stanley back
Speaker 1: in two thousand and six. Now each and every bank,
Speaker 1: at least the big banks are coming out there and
Speaker 1: paying two million dollars. This is the kind of fine
Speaker 1: you play pay when you find some sort of wrongdoing,
Speaker 1: when you bring down an insider trading cartel or something
Speaker 1: like that. But this, honestly is the reflection of the
Speaker 1: reality today, which is the Biden administration's approach to regulation.
Speaker 1: And that's what you're saying, playing out some of those
Speaker 1: fines somewhat eye wars ring so bigger than others. I
Speaker 1: guess they like you see it on your screen. There
Speaker 1: there's a big institutions right that we're talking about the
Speaker 1: kind of paying the price for this. I guess the
Speaker 1: question is what happens next? What's the reaction? Tell me
Speaker 1: about the WhatsApp cop? Is a WhatsApp cop on wool Street.
Speaker 1: That's a mouthful that that certainly seems to be the
Speaker 1: funny byproduct of the saga. But we've created a new
Speaker 1: compliance roll. All the banks that have that are part
Speaker 1: of the settlement have agreed with their SEC and CFTC
Speaker 1: to install a new confluence official whose role, effectively is
Speaker 1: to make sure that there are archiving and monitoring these
Speaker 1: communications properly. And we're more than happy to dub that
Speaker 1: role as the WhatsApp cop. What was the frustrations within
Speaker 1: the banks themselves? I think you know, they would argue,
Speaker 1: perhaps this is kind of a commonplace practice, but there's
Speaker 1: a caution retail as well. It is it is a
Speaker 1: cautionary deal and of course, you can see the frustration,
Speaker 1: right Look look at everything that the regulators have put
Speaker 1: out there. When they talk about the messages they found,
Speaker 1: they talk about the great volume of messages. But it's
Speaker 1: not like the unearthed some sort of fraud. It could
Speaker 1: very well have been everyday communication, could have been about work,
Speaker 1: but just that a regular everyday communication, whether it's about
Speaker 1: a new bond deal or something else that's going on.
Speaker 1: They shifted the platform from an email or an ib
Speaker 1: that they would normally use to these messaging apps. The
Speaker 1: regulators frustrations came through because they've got't necessarily monitor it
Speaker 1: and they just want to make sure that banks are safe.
Speaker 1: And sorry, right well, Bloomberg, trida natarada, naturaja, and thank
Speaker 1: you very much. The European Union's foreign policy chief is
Speaker 1: warning of retaliation for any attack on Europe's energy networks.
Speaker 1: The EU suspects damage to two nord Stream underwater natural
Speaker 1: gas pipelines running from Russia to Germany was sabotage and
Speaker 1: that they will support any investigation. Meanwhile, the CEO of
Speaker 1: dark Trace, one of the largest cyber security firms in Europe,
Speaker 1: says there is significant demand for business since the Russian
Speaker 1: War in Ukraine. Here's some of what Poppy Good Stuffson
Speaker 1: told Bloomberg's Tom mckenn in London. Critical infrastructure is an
Speaker 1: area that absolutely has to be right at the cutting
Speaker 1: edge of adopting sort of cyberth principles because they are
Speaker 1: so so many businesses rely on their their products, whether
Speaker 1: that's energy or other sort of supplies, and this isn't
Speaker 1: something that new that's necessarily come out today, even with
Speaker 1: things like sort of Russia and crane earlier in the year,
Speaker 1: we have had seen significant demand for our products from
Speaker 1: the critical national infrastructure sector purely for that reason because
Speaker 1: they are at heightened risk and there is such a
Speaker 1: dependence from that on their supply to so many other businesses,
Speaker 1: which particular areas isn't utility companies as energy companies and
Speaker 1: one of the specific demands that they need, the specific
Speaker 1: challenges they need addressed. It's all of the about just
Speaker 1: think about how many businesses depends on the services that
Speaker 1: they supply, so utilities and energy. We have seen heightened
Speaker 1: demand in CROs in terms of Europe and in US,
Speaker 1: and that's because they're an easy target. If you are
Speaker 1: operating a business that typically can be reliant on very
Speaker 1: old legacy systems that have been around for decades. They're
Speaker 1: not necessarily at the cutting edge of capability. But also,
Speaker 1: if you are looking to enact your cyber gains and
Speaker 1: use that to the nefarious reasons, there are a very
Speaker 1: high profile target where the consequences can be felt very
Speaker 1: very quietly, and therefore it makes a sort of ideal
Speaker 1: victim feeling you seeing you monitor this obviously on a daily,
Speaker 1: hourly basis, are you seeing a tick up of attacks
Speaker 1: emanating from Russia. We're not in the business of attribution necessarily,
Speaker 1: so we're not necessarily saying this is coming from one
Speaker 1: nation or the other. But since the invasion of Ukraine
Speaker 1: we have seen an optic and attacks across the critical
Speaker 1: infrastructure sectors, particularly in Europe and the US in this
Speaker 1: environment of higher interest rates and slower growth recession concerns.
Speaker 1: Are you seeing reluctance from clients and customs? Are you
Speaker 1: start need to see that? Ever way, I've answered, because
Speaker 1: I'm in past, I think to be honest, we are
Speaker 1: as a business, we're still quite a poor indicator of demands.
Speaker 1: More broadly, because we are still very much as supply
Speaker 1: constraint rather to man's constraints. So the our business growth
Speaker 1: so quick that I bring people in, so we're not
Speaker 1: necessarily a good proxy about what is happening in the market.
Speaker 1: More broadly, mark perspective, we're still seeing very strong demand
Speaker 1: for our acquisition costs. Are they inevitably going to be
Speaker 1: moving higher in this environment? I think you're seeing inflating
Speaker 1: costs that are all over predominantly in terms of you
Speaker 1: see that in terms of employee costs and things like that. Okay,
Speaker 1: a few months ago Toma Bravo was in conversations with them,
Speaker 1: of course about the potential takeover. It didn't come to pass.
Speaker 1: Can you give us some some detail as to why
Speaker 1: ultimately they walked away? I mean I had to be
Speaker 1: some fair as you can understand them phonily limited about
Speaker 1: what I can and can't say. But what I will
Speaker 1: say is we've loved being a public company and there's
Speaker 1: a whole ton of ideas. Was a question of pricing
Speaker 1: or do they find something that they didn't like? I
Speaker 1: would say it's no. These conversations leaked at the very
Speaker 1: very earlier stage of engagement with Tom Bravo that unfortunately
Speaker 1: became public, and you know, in September we said that
Speaker 1: those conversations had ended. We have a legal obligation to
Speaker 1: explore any such office. But you know, if I was
Speaker 1: st where Termer Bravo is, I'll be looking across at
Speaker 1: the UK thinking, you know, it's a very cheap area
Speaker 1: to be able to come protect you decent takeover. Does
Speaker 1: the collapse of the pound make you a more attractive target?
Speaker 1: And arguing conversations with anyone else, I would speculate that
Speaker 1: if I was in the U S side looking over
Speaker 1: here at the UK, I would say, yeah, the the
Speaker 1: UK does look cheap. But from my perspective and from
Speaker 1: my business, we're just really prioritizing or exploring all of
Speaker 1: the opportunities that we see ahead of us, and we've
Speaker 1: got a whole bunch of ideas, a whole bunch of innovation.
Speaker 1: We had new product launch over the summer and we're
Speaker 1: just really excited to get back to businesses year. That
Speaker 1: was Dark Tray CEO Poppy gas Staffson that the Bloomberg
Speaker 1: Text Summit in London coming up. Circle and robin Hood
Speaker 1: team up to offer its stable coin to retail traders.
Speaker 1: Will discuss with the CEO of Circle next this is
Speaker 1: Bloomberg time now for our crypto report. Today we have
Speaker 1: the CEO behind one of the most populous stable coins
Speaker 1: in circulation. For that, we turned to Bloomberg's crypto contributor Sali.
Speaker 1: Thank you so much, Ed. And today we have Circle
Speaker 1: founder and CEO Jeremy Alaire. Thank you so much for
Speaker 1: joining us because you have this new deal. You've struck
Speaker 1: this partnership with robin Hood. And I'm wondering, you're somebody
Speaker 1: that already works with so many institutions, what does this
Speaker 1: do to really add to your base of retail customers. Yeah, thanks,
Speaker 1: thanks so much for having me on. Um, we we
Speaker 1: announced a broad partnership with robin Hood. Here today it
Speaker 1: converge our first platform ecosystem conference. We've got thousands of
Speaker 1: people here in San Francisco, which we're pretty excited about.
Speaker 1: And UM, this morning, UM, you know, on stage, uh,
Speaker 1: Robin Hood CTO you know, talked about this and what
Speaker 1: I can say is, you know, robin Hood is an
Speaker 1: amazing retail in best or platform. They have twenty three
Speaker 1: million users. UM. It really is sort of represents the
Speaker 1: kind of mainstream user participating in this more democratized financial system.
Speaker 1: And what we've done with robin Hood is a few things.
Speaker 1: I think the first is just making USDC one of
Speaker 1: the digital currencies that people can trade on on robin Hood.
Speaker 1: They started with some of the you know, kind of
Speaker 1: traditional popular cryptocurrencies, but USDC has just become such a
Speaker 1: critical part of anyone that's operating in the digital assets space,
Speaker 1: whether you're using exchanges while it's defy and so just
Speaker 1: having that built into robin hood and their twenty three
Speaker 1: million users is really powerful. The second thing really was,
Speaker 1: you know, they've launched a new wallet, a Web three wallet,
Speaker 1: and you know they're really trying to bring that huge
Speaker 1: user base they have into Web three and you know,
Speaker 1: making fiction lists fast and easy payments is a is
Speaker 1: a core part of what people want to be able
Speaker 1: to do in Web three and USDC is a core
Speaker 1: part of that value proposition and and built in part
Speaker 1: of that. Well, for me, as you think about how
Speaker 1: core USDC is and the stable coin ecosystem is when
Speaker 1: it comes to the linkage between the traditional financial system
Speaker 1: and the crypto world, let's quick listen to her of
Speaker 1: what that church your own parallel had to say. Given
Speaker 1: that there's so much regulatory attention to take a listen
Speaker 1: to this sound bite. There's a real need for more
Speaker 1: appropriate regulation so that as as a DeFi expands and
Speaker 1: starts to touch more and more retail customers and that
Speaker 1: sort of thing. Uh, so that appropriate regulation is in place.
Speaker 1: And I'm really curious here, who do you think is
Speaker 1: going to take the biggest lead here and really stepping
Speaker 1: in and setting the groundwork for the US And how
Speaker 1: soon do you expect it? Well, I mean, I think
Speaker 1: this is a critical issue, and I think there's bipartisan
Speaker 1: support for this idea that payment stable coins such as
Speaker 1: U s DC are a critical piece of how the
Speaker 1: dollar is going to compete on the Internet. And the
Speaker 1: focus of policymakers, regulators like the FED and Treasury and
Speaker 1: others is we need to have a clear set of
Speaker 1: statutes for dollar stable coins in the United States, both
Speaker 1: to manage the risks but also to make it clear
Speaker 1: that this is a new model for using dollars on
Speaker 1: the Internet. And I think that with that is going
Speaker 1: to come tremendous legitimacy for not just stable coins, but
Speaker 1: for the advancement of of digital assets as a as
Speaker 1: a core part of the financial system, core part of
Speaker 1: the financial system, and think about what's happening in China
Speaker 1: and hundreds of millions of accounts when it comes to
Speaker 1: the digital one already very early to really get behind
Speaker 1: a central bank digital currency. Do you think the US
Speaker 1: is falling behind? You know, we like to say that
Speaker 1: the US is already winning the digital currency space race.
Speaker 1: Dollar digital currencies are the most widely used digital currencies
Speaker 1: on the Internet today, which says something which is the
Speaker 1: preference for the dollar, the power of the open innovation
Speaker 1: of blockchains, the power of private sector innovation in the space.
Speaker 1: That's all. He created a leadership position for the dollar
Speaker 1: and for the United States. Now, what the United States
Speaker 1: needs to do is codify that and and solidify that
Speaker 1: so that these digital currency dollars like USDC and others
Speaker 1: that many other firms will likely issue, can become the
Speaker 1: foundation for how financial products and services and payments and
Speaker 1: commerce are going to work on the Internet. And so
Speaker 1: really this is an opportunity for the U S who
Speaker 1: sees that existing leadership position and strengthen it. Well, we're
Speaker 1: also coming at this conversation at a time of just
Speaker 1: tremendous strength in the dollar. And if you look at
Speaker 1: something that Sam bankmen, Freed tweeted just earlier this week, Boy,
Speaker 1: would the world be thinking differently about crypto price moves
Speaker 1: if they measured it for verse is world currency baskets
Speaker 1: instead of just US dollars. I'm wondering how you interpret
Speaker 1: that and what that means for currencies around the world
Speaker 1: in relationship cryptocurrency. I mean, look, it's a it's a
Speaker 1: fascinating time from a macro perspective. UM, I'm gonna be
Speaker 1: talking in a few minutes here. It converged with Larry
Speaker 1: Summers about that macro outlook and out the role of
Speaker 1: the dollar and what role the dollar is playing not
Speaker 1: just in currency markets today, but the role that the
Speaker 1: dollar is going to play on the internet. UM. I
Speaker 1: think right now it's a pretty it's a pretty pivotal moment.
Speaker 1: And um, I think the structure of the international monetary
Speaker 1: system is at stake, and there's a new kind of
Speaker 1: competition that's happening in currencies. And I think, you know,
Speaker 1: payment stable coins and this form of digital currency aligns
Speaker 1: with these kind of changing macro dynamics, and so I
Speaker 1: think play together give us some more specificity here, what
Speaker 1: does the future look like in a world where currencies
Speaker 1: have been kind of all over the place more recently,
Speaker 1: A lot of people really worry about the value of
Speaker 1: what they're holding. So what role very specifically does a
Speaker 1: stable coin play. Especially outside of the US, We've we've
Speaker 1: seen an incredible amount of adoption of dollar digital currencies
Speaker 1: like USDC all around the world. The demand for being
Speaker 1: able to transact in the dollar and using it as
Speaker 1: a medium of exchange on the internet is very high.
Speaker 1: I think that says a lot about the strength of
Speaker 1: the dollar as an international currency. And I think the
Speaker 1: growth of these networks, the growth of these blockchain networks,
Speaker 1: the proliferation of more and more of these digital wallets
Speaker 1: like robin Hood or coin base or so many other
Speaker 1: products that are out there. Um are are you know,
Speaker 1: are going to make these kinds of fiat digital currency
Speaker 1: is even more popular in the world, And I think
Speaker 1: that's you know, I think that's a you know, it's
Speaker 1: a tremendous opportunity for the United States. Now, A question
Speaker 1: for you just about circle itself. Do you have any
Speaker 1: fundraising plans? What's next for you guys as you grow,
Speaker 1: and what's the status of going public? Yeah, so, um
Speaker 1: circles in a really strong financial position. We've been growing
Speaker 1: pretty rapidly over the past couple of years. You can
Speaker 1: see that in in sort of the growth in USDC.
Speaker 1: The company's more than doubling in size this year, and
Speaker 1: we're we're in in the best financial position that we've
Speaker 1: really ever been in. We are in a registration process
Speaker 1: with the SEC to become a public company, and we
Speaker 1: continue to go through that process of becoming qualified to
Speaker 1: be listed on the New York Stock Exchange and and
Speaker 1: hopefully we'll get there in the near future. What's the
Speaker 1: competitive landscape here? Do you think that USDC we'll look
Speaker 1: see us d T very soon tether in market cap?
Speaker 1: Why do you think that hasn't happened yet? And when
Speaker 1: will it happen? Do you think? Yeah, I don't like
Speaker 1: to make you know, timeframe predictions or things like that.
Speaker 1: I think we've always just been very heads down focused
Speaker 1: on building something with a lot of trust and transparency,
Speaker 1: doing it in a regulated environment, partnering with great institutions,
Speaker 1: with great companies to continue to build this out, working
Speaker 1: with the developer community to grow this and I think
Speaker 1: if we continue to do that, the rest the rest
Speaker 1: of the work kind of gets done and so we're
Speaker 1: in the very early stages of the adoption of of
Speaker 1: dollar stable coins and technology like this. You know, we
Speaker 1: think the total addressable market for this kind of technology
Speaker 1: is M two money, which is in the tens of
Speaker 1: trillions of dollars globally, and so it's super early stage. UM,
Speaker 1: We're just focused on just trying to build infrastructure that
Speaker 1: works for developers, businesses, people, users all around the world,
Speaker 1: and we'll just keep trying to improve that. Jeremy Lair,
Speaker 1: that Circle's founder and CEO, on the heels of a
Speaker 1: new big deal with Robin Hood. Thank you so much
Speaker 1: for your time. Add back to you. Thanks so Nali.
Speaker 1: Now to the latest with Congress is battle to regulate
Speaker 1: big tech. Supporters of a landmark bill to restrict Internet
Speaker 1: giants from favoring their own products has a tough road
Speaker 1: ahead now lawmakers are trying to jam the legislation through
Speaker 1: the brief lane duck period after the elections. Here to
Speaker 1: discuss is Bloomberg's Emily burn Baum. Emily, why haven't we
Speaker 1: voted on this yet? Hi? Thanks so much for having me. UM.
Speaker 1: Majority Leader Chuck Schumer pledged earlier this year that he
Speaker 1: would put this legislation on the floor for obviously been months,
Speaker 1: and that Um, we're hearing that he simply doesn't think
Speaker 1: it has the votes. The supporters of the legislation, such
Speaker 1: as Minnesota Democrat Amy Klobshar, say they absolutely do have
Speaker 1: the votes. You just have to put it on the
Speaker 1: floor to test that. Um. Schumer is uncomfortable with that.
Speaker 1: He doesn't want people vote ahead of the mid term.
Speaker 1: So that's why it has gone this long without going
Speaker 1: to a vote. Emily, I'm reading your story on the
Speaker 1: Bloomberg terminal on bloomberg dot com title big text fos
Speaker 1: Pin fading antitrust hope on Lane Duck vote. Now, I
Speaker 1: think I'm right in saying that this final push for
Speaker 1: legislation was plotted over pretzels and beer. Give me the background. Yeah,
Speaker 1: So there was an October Fest, theamed Happy Hour gathering
Speaker 1: UM last week. Basically, Uh, it was activist UM Congressional
Speaker 1: Aid supporting the legislation, FTC chair Lena Cohn, d O
Speaker 1: j ANTI Trust head Jonathan Cantor so some of the
Speaker 1: most important people in the Biden administration and in Congress,
Speaker 1: as well as Elizabeth Warren UM plotting out how are
Speaker 1: we going to get this bill across the finish line
Speaker 1: before the end of the year. UM. It looks likely
Speaker 1: that the GOP is going to retake the House. UM,
Speaker 1: the GOP is not going to take up this bill
Speaker 1: in its current form, especially under a potential speaker Kevin McCarthy.
Speaker 1: So they they were just trying to strategize and get together.
Speaker 1: Well quickly, Emily, how do they regroup? So are really
Speaker 1: pushing for the lame duck vote? They think, fine, have
Speaker 1: the mid terms pass and then there's no reason for
Speaker 1: vulnerable Democrats not to want to take this vote. They're
Speaker 1: going to spend the next couple of months firming up
Speaker 1: the whip count UM and getting people on the record
Speaker 1: saying I support this legislation. UM, in a lastic effort.
Speaker 1: All right, Bloomberg's Emily burn Boum, thank you for that.
Speaker 1: That does it For this edition of Bloomberg Technology Thursday,
Speaker 1: we have Desmond Limb from Workstream to talk employment, particularly
Speaker 1: with frontline workers. Don't forget you can check out our podcasts.
Speaker 1: You can find it on the terminal as well as
Speaker 1: online on Apple, Spotify and also on I Heart Radio.
Speaker 1: This is Bloomberg