Speaker 1: From hard of were Innovation, Money Empower Colne in Silicon Valley, NBR.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 1: I'm Caroline Hyde of Bloomberg's World headquarters in New York.
Speaker 1: Ed Ludlow is off today. This is Bloomberg Technology. Coming up,
Speaker 1: we go live to Capitol Hill where the CEO of
Speaker 1: TikTok is defending his company against the US lawmakers who
Speaker 1: are calling for a band. We're bringing the details, and
Speaker 1: short seller Hendenberg Research targeting block with its latest report.
Speaker 1: We break down what's about cash app Unit in particular
Speaker 1: that it's concerned about as the payments company plunges in trading,
Speaker 1: Plus lights Camera, Apple, the iphonemaker spending billions to break
Speaker 1: into show business, more on the company's plans to raise
Speaker 1: its Hollywood profile, and a low subscribers to streaming service,
Speaker 1: all that so much more. Coming up meanwhile is Apple
Speaker 1: and some of the big techs seeming like some sort
Speaker 1: of haven on the day. We're currently seeing the naszack
Speaker 1: up more than two percentage points, even though we continue
Speaker 1: to worry about some of the solidity in the banks.
Speaker 1: Today the stock six hundred is actually down on the
Speaker 1: day largely dragged down by those banking stocks over in Europe,
Speaker 1: the Pound. Want to keep an eye on Europe still trading,
Speaker 1: of course, the pound up four tenths of percent as
Speaker 1: we do. Indeed, see the Bank of England light the
Speaker 1: United States Federal Reserve high grates by twenty five basis points.
Speaker 1: Moving on, that's the macro picture for all of your
Speaker 1: technology investors out there. I'm looking at what's happening in
Speaker 1: bitcoin though, because once again is this a haven of choices.
Speaker 1: It's a move that we see as we still worry
Speaker 1: and remain cynical around a banking industry. Here in the
Speaker 1: United States, we're up five percent over the course of
Speaker 1: just US trading day alone. But we want to dive
Speaker 1: into the micro moves that are so important on the day.
Speaker 1: Let's going over to bring most critic up to Yeah. Well, Carolin,
Speaker 1: you've covered the macro pretty well with getting to the
Speaker 1: micro some major movers to your point, and we are
Speaker 1: seeing a lot of that kind of green on the
Speaker 1: screen coming from a technology space. You're more biggest INDESK contributors, Apple, Amazon,
Speaker 1: and Bidea is really in kind of focus here, and
Speaker 1: I really want to talk about some of the downside
Speaker 1: movers here because to your point, Caroline, those crypto stocks
Speaker 1: are getting hit hard, but not necessarily for the fundamental reasons. Look,
Speaker 1: I mean the macro reasons. The Block story is fascinating.
Speaker 1: Hindenburg Research coming out with the short report saying, look,
Speaker 1: they are concerned about Block and the financing. They're the
Speaker 1: Block formerly known as Square, Jack Dorsey's baby, basically that
Speaker 1: sending the shares down about thirteen and a half percent.
Speaker 1: We are still, of course waiting for comment from Block
Speaker 1: as well. We want to talk about coin base getting
Speaker 1: quite the hit after the SEC yesterday after hours put
Speaker 1: it on notice when it comes to some of their offerings.
Speaker 1: This is really important in the crypto space because one
Speaker 1: of the big issues has simply been crypto ETFs and
Speaker 1: whether or not they can actually pass as a real
Speaker 1: moving vehicle. The upside their story is interesting, Caroline. At
Speaker 1: the top you mentioned that TikTok hearing over in Congress.
Speaker 1: You are seeing snapshares rally off that. Remember, Snap is
Speaker 1: one of the major benefactors. If TikTok isn't the band
Speaker 1: at least on government devices stay side and around the world.
Speaker 1: So snapshares highed by four point four percent and Netflix. Look,
Speaker 1: there's no fundamental reason here yet for Netflix, but you
Speaker 1: have to know a nine percent rally is nothing to
Speaker 1: scoff at one of the biggest heavy volume trades. Who
Speaker 1: are seeing today some rumors about kind of funding from Apple.
Speaker 1: But it's really something to keep an eye on. Caroline,
Speaker 1: pretty good to such a great wrap up. Thank you.
Speaker 1: Let's get back to the key story of a Day,
Speaker 1: which is called TikTok CEO show to testifying on Capitol
Speaker 1: Hill as lawmakers call for a band. Here's just some
Speaker 1: of what he's had to say earlier about Chinese access
Speaker 1: to its user data. I have seen no evidence that
Speaker 1: the Chinese government has access to that data. They have
Speaker 1: never asked us. We have not provided well in a
Speaker 1: way I've asked that I find that actually preposterous. I
Speaker 1: have looked in I have seen no evidence of this happening.
Speaker 1: And in order to assure everybody here and all our users,
Speaker 1: our commitment is to move day data into the United
Speaker 1: States to be stored on American soil by an American company,
Speaker 1: overseen by American personnel. May we go now to Capitol Hill,
Speaker 1: where not only a show to still being testified, over there.
Speaker 1: But Alex Sperenca is standing by to bring us anything
Speaker 1: that actually we've learned that is new, anything in the arguments,
Speaker 1: the nuances that we hadn't heard before. So show Chu
Speaker 1: is really coming in with a lot of what we've
Speaker 1: heard before, and that doesn't seem to be wooing what
Speaker 1: we knew to be some skeptical lawmakers. Lawmakers started this
Speaker 1: testimony which is still on going just behind me in
Speaker 1: front of a packed room, basically trying to establish the
Speaker 1: TikTok connection to China. Chu was queried on who prepped
Speaker 1: him for this testimony. Was it anyone from Mite Dance?
Speaker 1: How often does he talk to Chinese executives? Has he
Speaker 1: heard from anyone from in the Chinese Communist Party? It
Speaker 1: was basically an establishment from these skeptical lawmakers to try
Speaker 1: to connect TikTok to China. Now Chu has come back
Speaker 1: with a lot of the facts we've heard before that
Speaker 1: he is working on coordinating off user data here in
Speaker 1: the US, that he does not talk to the Chinese
Speaker 1: Communist Party. But I will tell you, Caroline, based on
Speaker 1: kind of him being cut off by a lot of
Speaker 1: these lawmakers, based on the times that the chairwoman has
Speaker 1: not allowed him to respond to questions. It doesn't seem
Speaker 1: like he's making any headway with this group in the room.
Speaker 1: It really is notable as we still go to the
Speaker 1: room and say, we've got a wonderful tea live blog
Speaker 1: going on the Bloomberg terminal, Alex that I know you're
Speaker 1: contributing to, as well as some of our other reporters.
Speaker 1: Brodie Ford saying that at the moment a Georgia Republican
Speaker 1: Buddy Carter, once again talking about deadly TikTok challenges, that
Speaker 1: seems to be really the emotive subject, isn't it children
Speaker 1: in particular? There it was, and I will tell you
Speaker 1: the room got very quiet earlier in the day when
Speaker 1: a number of videos of users talking about suicide were
Speaker 1: played for the committee, and that seems to be kind
Speaker 1: of the emotional heartstrings that the lawmakers are pulling on.
Speaker 1: What is TikTok doing to protect our children? Now? Sho
Speaker 1: did come back and say we have strong content moderation policies.
Speaker 1: We are putting in time limits for users under the
Speaker 1: age of eighteen. But I will how you those answers
Speaker 1: as well were responded to by the lawmaker saying that's
Speaker 1: not enough. I hear what you're doing now, but I
Speaker 1: need you to commit to more brief recess has been cooled.
Speaker 1: It's going to get busy in that corridor with you. Alex.
Speaker 1: Just set the scene a little bit, because you did
Speaker 1: a wonderful piece of digging on really the Ventia community
Speaker 1: in and around the relationship, broader relationship between US and China.
Speaker 1: There was an important dinner last night with an old
Speaker 1: coastala there. We understand Peter tale as well, what are lawmakers?
Speaker 1: Who are lawmakers listening to aside from the leader TikTok?
Speaker 1: That's right, literally with an eye shot across the lawn
Speaker 1: from Capitol Hill, the Hill and Valley Foundation where Peter
Speaker 1: TiAl spoke last night was again this kind of line
Speaker 1: of anti China sentiment. Basically, Peter Teal compared TikTok to
Speaker 1: the US homeless problem, saying it's something that we just
Speaker 1: can't fix. So there are folks on both sides of
Speaker 1: the coast here in the US who are definitely not
Speaker 1: on TikTok side. And I will tell you in terms
Speaker 1: of lies here on the Hill, TikTok has had a
Speaker 1: few We heard Representative Jamal Bowman speak yesterday at a
Speaker 1: TikTok event on the lawn outside of the Capitol building.
Speaker 1: But there are not very many voices who are piping up.
Speaker 1: And we've heard during this hearing from the other House
Speaker 1: from senators who are also coming out with some strong
Speaker 1: calls to continue to try to be on TikTok. Alex Brinka,
Speaker 1: We'll let you get back to trying to speak to
Speaker 1: some of those lawmakers. We thank you so much. Meanwhile,
Speaker 1: we got another one for you right now, Representative Jim
Speaker 1: Himes of Connecticut, who is on the House Select Committee
Speaker 1: on Intelligence, so deep knowledge on perhaps some of the
Speaker 1: data issues at stake here with TikTok, as well as
Speaker 1: of course the financial services is another area that you oversee, Jim,
Speaker 1: and accomplishment is great to have some time with you. Please,
Speaker 1: can you just talk to us a little bit about
Speaker 1: in February you said you're not quite there yet about
Speaker 1: an idea of imposing an outright ban on TikTok. You
Speaker 1: needed to learn more. Do you feel you've learned more
Speaker 1: to make a decision yet? No, I haven't. And let's
Speaker 1: face it, we're not doing a lot of learning today today.
Speaker 1: As one of those moments the Congress where a witness
Speaker 1: gets beat up, the witness is not allowed to answer
Speaker 1: the questions. You know, this is a moment of people
Speaker 1: expressing emotion. And I think, look, I've said this before.
Speaker 1: I work a lot in national security. TikTok is not
Speaker 1: on my phone, It's not anywhere near my phone, and
Speaker 1: people in sensitive positions, because of course TikTok is probably
Speaker 1: more accessible to the Chinese government than most platforms. Shouldn't
Speaker 1: be on anybody who's a phone who does this stuff.
Speaker 1: But look, an outright ban. This is a deep breath moment,
Speaker 1: right because the American people need to reflect on the
Speaker 1: equities associated with saying sorry, the federal government is not
Speaker 1: going to let you use this media. And my question is,
Speaker 1: where's the limiting principle? What if, all of a sudden
Speaker 1: we get really angry at Belarost, does that mean that
Speaker 1: we ban access to Belarusian newspapers. All I'm saying here
Speaker 1: is that we need to think about what we really
Speaker 1: want to do about this. The CEO apparently this morning
Speaker 1: offered the idea of moving the servers to a non
Speaker 1: Chinese country, to the United States. I think he said
Speaker 1: they could contemplate an ownership change. But before we all
Speaker 1: get on the bandwagon of having the federal government ban
Speaker 1: Americans access to a particular media, we do need to
Speaker 1: reflect on what, you know, what's the limiting principle? What
Speaker 1: does that precedent establish with respect of the power of
Speaker 1: the federal government. It feels as though you're aligning yourself
Speaker 1: in some way with your consistent your constituents. Here one
Speaker 1: hundred and fifty million people use this app. But how
Speaker 1: what would you like to see other than moving servers?
Speaker 1: Is it would a nice balancing app for you be
Speaker 1: a sell off in some way? And what do you
Speaker 1: think to China's reaction earlier today the comment secretary, They're saying, well,
Speaker 1: that's not going on unless we approve it. Well, I
Speaker 1: think in this instance, I'm actually not aligning myself with
Speaker 1: my constituents. I'm drawing on what I know about Chinese
Speaker 1: capabilities and what I know about the Constitution of United
Speaker 1: States in the First Amendment. What I can tell you
Speaker 1: is that the Chinese are pretty darn good at breaking
Speaker 1: into anything they want to break into. They're not the
Speaker 1: only ones that are good at that. But you know,
Speaker 1: here we are, you know, calling for a ban on
Speaker 1: TikTok when we actually haven't as a Congress been able
Speaker 1: to put in place a federal privacy regulation. So, yes,
Speaker 1: the Chinese Communist Party, we really don't want them to
Speaker 1: have our data. But guess what you know, Facebook, Instagram,
Speaker 1: all of these entities have our data. They sell it.
Speaker 1: I would suggest that the first thing we ought to
Speaker 1: do is actually pass some federal privacy legislation and then
Speaker 1: really get into the details of what a good solution
Speaker 1: might be with respect to TikTok. Maybe it is moving
Speaker 1: all of their operations outside of China, maybe it is
Speaker 1: an ownership change. But again, this is one of those moments.
Speaker 1: It's a little bit like when we think we've really
Speaker 1: accomplished something because we rename the French fries in the
Speaker 1: cafeteria freedom fries because we're angry at the French. Right.
Speaker 1: This is again a moment with a lot at stake
Speaker 1: in which we ought to be maybe a little bit
Speaker 1: more deliberate than we're being today. Congressman, how optimistic call
Speaker 1: you that such a deal can get done around privacy
Speaker 1: on a bipodism basis. Well, look, at the end of
Speaker 1: the day, this is well, let's let's let's focus on
Speaker 1: TikTok for a second. You know, TikTok is obviously absorbing
Speaker 1: sentiment right now. They might want to think about what
Speaker 1: they might do with respect to ownership, with respect to
Speaker 1: where their operations are located, to maybe take this issue
Speaker 1: off the table. Privacy, Frankly, this is an area where
Speaker 1: the Congress has been remiss to say the least right.
Speaker 1: You know, I have to daughters who live on social media,
Speaker 1: and it just appalls me to imagine that pretty much
Speaker 1: anybody out there can buy their data that they see
Speaker 1: there in some instances, most intimate interactions with commercial retailers
Speaker 1: and that sort of thing. It should happen, But sadly,
Speaker 1: and by the way, we had a little bit of
Speaker 1: progress in the last Congress, but it hasn't happened. So
Speaker 1: my advice would be, let's continue to study TikTok and
Speaker 1: think about the right way to handle it. But for
Speaker 1: God's sakes, let's get some federal privacy legislation done the
Speaker 1: way Europe has done, the way lots of countries have done.
Speaker 1: Until we do that, it's a little hard for us
Speaker 1: to step onto a soapbox and decide that we're going
Speaker 1: to take a massive moral high ground on issues of
Speaker 1: privacy at the moment, the evidence for you TikTok Ceo
Speaker 1: saying there isn't any evidence that China has had access
Speaker 1: to the data. Do you believe him? I don't have
Speaker 1: any information either way. I can tell you, though, as
Speaker 1: a member of the Intelligence Committee, that if the Chinese
Speaker 1: want access to that data, they will get it. They
Speaker 1: might not tell TikTok, but the Chinese are adept at
Speaker 1: breaking into pretty much anything they want to break into
Speaker 1: the way. That's something to think about. Even if all
Speaker 1: of a sudden the servers were located in the United States,
Speaker 1: I wouldn't tell you that. I'm one hundred percent confidence
Speaker 1: that the Chinese can't get it there too. I can't
Speaker 1: tell you that the Chinese can't get into Facebook servers.
Speaker 1: So I don't know the answer to the question. But
Speaker 1: it's a little more complicated than just simply where their
Speaker 1: servers are located. Tell you what's also been complicated for
Speaker 1: technology investors, for technology builders has been the banking system
Speaker 1: of late Congressman Himes. And I know you've got some
Speaker 1: expertise their former banko government, of course, on the Select
Speaker 1: Committee for Economic Disparity and Fairness and growth. How concerned
Speaker 1: are you at the moment that companies that are building
Speaker 1: have access to funds that they need and have well
Speaker 1: security in the overall banking system here in the United States.
Speaker 1: I feel very good about the overall banking system. I
Speaker 1: was a freshman here in two thousand and nine when
Speaker 1: we really thought that JP Morgan and City Bank and
Speaker 1: other huge banks were going to fail, and there was
Speaker 1: a very real risk that they would. The sector itself
Speaker 1: is very strong right now. We obviously saw problems at
Speaker 1: three or four banks. I think that the regulators and
Speaker 1: the Federal Reserve stepped in in a very competent way
Speaker 1: to handle. I do think we've got a little bit
Speaker 1: of work to think about. A world in which you
Speaker 1: depositors only deposit the guaranteed amount at small and medium
Speaker 1: sized banks. That of course creates a lot of pressure
Speaker 1: for consolidation in the industry. But to answer your question,
Speaker 1: I think today we may see stock prices move up
Speaker 1: and down in the coming days and weeks or so,
Speaker 1: but my sense is that overall the banking system is very,
Speaker 1: very safe and depositors should not be worried about their
Speaker 1: about their deposits. Congressman Jim Himes. We thank you so
Speaker 1: much for your time your expertise across well all areas
Speaker 1: of technology. Today. Betting against Jack Dulsey, Hindenburgh Research strikes again.
Speaker 1: It is a forensic research outfit and a well known
Speaker 1: short seller. This time it's claiming that the company Block
Speaker 1: that Jack Dulsey runs was facilitating forsters who will fordulently
Speaker 1: used government stimulus programs during the pandemic. Block, which owns
Speaker 1: cash app Tidal, the music streaming companies set up by
Speaker 1: jay Z, is down twenty percent on the news. Hinnumburg
Speaker 1: Research claims that after a two year investigation, they've understood
Speaker 1: cash app was facilitating billions in government payment forward. Basically,
Speaker 1: multiple people would use the same bank account to claim
Speaker 1: government stimulus. Hindumburg says these were brazen red flags of
Speaker 1: forward and down to shortcomings in compliance now. Hinneburg also
Speaker 1: takes issue with other areas of block, saying that cash
Speaker 1: app is over inflating the amount of users it has,
Speaker 1: that it doesn't like the way in which it's charging
Speaker 1: merchants every time you swipe your card, and also it's
Speaker 1: critical of the twenty nine billion dollar deal that was
Speaker 1: made to buy Australian buy now, pay later company after Pay.
Speaker 1: So far, we're yet to hear from Block's own executives,
Speaker 1: but we do know that some analysts have weighed in
Speaker 1: already Bared for example, saying, look, they are worried if
Speaker 1: there's any criminal activity what that does to invest a sentiment,
Speaker 1: But from their perspective, the share as a good un
Speaker 1: Someone's got even more information than this, pretty most Jennys
Speaker 1: Terrain in London helping break down this story and so
Speaker 1: thoroughly Jenny. Thus far we've still not heard from Block.
Speaker 1: You've reached out many other people have. What do we
Speaker 1: know in terms of other implications to the business model here,
Speaker 1: because we know that there's been regulatory concerns shall we say, viruses, paypals,
Speaker 1: Venmo and the likes. Yeah, I think there's a few
Speaker 1: different pieces that I think folks are really keying in
Speaker 1: on with this. I mean, I think any implication that
Speaker 1: criminal actors are using blocks cash app to facilitate their
Speaker 1: transactions is you know, really bad news. I think that's
Speaker 1: when you get regulators looking at you. They could impose
Speaker 1: different kinds of penalties, whether that's monetary or you know,
Speaker 1: different remediation activities. So that's something that investors will really
Speaker 1: keen on and want to see further proof of and
Speaker 1: probably hear from the company on you know, I whether
Speaker 1: or not this is true obviously first, but if it is,
Speaker 1: you know, how are they what steps are they taking
Speaker 1: to try and stop that. So I think that's probably
Speaker 1: the number one thing folks are keying in on, and
Speaker 1: a lot of the other stuff that they laid out,
Speaker 1: it's stuff that was probably a little bit known by
Speaker 1: the investor community, but seeing it all laid out, and
Speaker 1: you know, this very lengthy report at the end of
Speaker 1: a two year investigation, it is sending kind of chills
Speaker 1: through through not just block stock, but really the entire
Speaker 1: payments industry. Well said, interestingly, this is a company that
Speaker 1: has full of from grace in terms of a market
Speaker 1: capitalization perspective since the Well area of twenty twenty one,
Speaker 1: when we were still very much caught up in COVID concerns.
Speaker 1: Was that to do with some of these warriors around
Speaker 1: the broader ecosystem and ultimately governance of it. No, So
Speaker 1: I think this is it's another example where you know,
Speaker 1: you've got a macro issue weighing on a stock which
Speaker 1: is during the pandemic, Block and all of the other
Speaker 1: big payment processors solve volumes really balloon because folks were
Speaker 1: trapped inside and suddenly spending a lot more money, you know,
Speaker 1: online and doing a lot more online shopping and doing
Speaker 1: a lot more mobile money transfers of cash app has
Speaker 1: really taken off in the past few years, but that's
Speaker 1: slowed down, you know, just it's hard to keep lapping
Speaker 1: such intense growth and so they've had to lean on
Speaker 1: new areas and so that has just been a broader
Speaker 1: overhang on the entire payment sector and it is not
Speaker 1: block specific. What is block block specific today is this accusation,
Speaker 1: you know from Hindenburg that we could be seeing widespread
Speaker 1: fraudulent use of cash app, and and that's something that
Speaker 1: you know, it would be very specific to this company,
Speaker 1: and it's why their stock is down, you know, as
Speaker 1: much as it is today. And we such targets do
Speaker 1: tend to see sustained Prussia on their stocks. Jenny Soerine,
Speaker 1: we thank you so much, coming a love from London
Speaker 1: for us, coming out from Teshiba to AI to EVS.
Speaker 1: We will run you through all the rest that's going
Speaker 1: on in technology. We're talking Tech Next Discipline book. Nvidia
Speaker 1: Chief Technology of A Michael Kagan says a new revolution
Speaker 1: and technology will present multiple opportunities going forward for his
Speaker 1: own company, especially bring bags, Tom McKenzie. Every every new
Speaker 1: technology and every new revolutional technology, it's opportunity for doing
Speaker 1: good things and for opportunity for going bad things, and
Speaker 1: we definitely need to be aware of this and be
Speaker 1: ready to mitigate this. Wet Nvidia, you know, work very
Speaker 1: closely with the collaborating with the regulations we are making
Speaker 1: to what to extend that we can make sure that
Speaker 1: our technology and our products don't get to the beat hands.
Speaker 1: We can trace it down all the way to the
Speaker 1: to the end user. But we make sure that people
Speaker 1: that we sell our things for, our technology for, and
Speaker 1: our products for are not using them in the way
Speaker 1: that will damage the society. Okay, So your comfort that
Speaker 1: in terms of the framework and a focus on ethics
Speaker 1: of AI, the end video is doing enough. I think
Speaker 1: it is doing more than enough. We are on the
Speaker 1: very extreme case side of this. We are definitely not
Speaker 1: doing anything in the gray area. It's very black and white.
Speaker 1: We are we are we are not getting to the
Speaker 1: gray area. And we're also developing the technologies that will
Speaker 1: enable to mitigate cyber attacks in the data center. Actually,
Speaker 1: now there's people even more dependent on the data center infrastructure,
Speaker 1: and we are building the technology that will enable the
Speaker 1: provisioning and mitigating the cyber attack within milliseconds or seconds
Speaker 1: versus few months that it would it takes. Today, you
Speaker 1: have two customers, and Video has customers of course all
Speaker 1: over the world. You're a global company. Some of those
Speaker 1: customers include Chinese companies Ali, Baba, ten Cent, by To.
Speaker 1: How do you serve your Chinese clients and customers given
Speaker 1: the ban by the US on those high end chips,
Speaker 1: the A one hundreds, the one hundreds, how do you
Speaker 1: continue to serve those Chinese clients? Okay, so first of all,
Speaker 1: you know, if you look at the Chinese Chinese market,
Speaker 1: it's a big market and they better have the computing
Speaker 1: accelerating technology so they will use a reasonable amount of energy.
Speaker 1: There is a bend on the and the restrictions of
Speaker 1: sell some type of chips to the to the to
Speaker 1: chatter market, and we have chips that comply with the regulations.
Speaker 1: We're definitely not violating any regulations of the of the
Speaker 1: US government. We have products that we can serve China
Speaker 1: market within restrictions and within the rules that are imposed
Speaker 1: by the US government. Video CTO that Michael Cagan. Time
Speaker 1: now for talking technology and we can stick on the
Speaker 1: theme of AI. Startup Character AI, which lets people create
Speaker 1: their own chatbotses raised one hundred fifty million dollars in
Speaker 1: funding round led by and Recent Horowitz, notching a one
Speaker 1: billion dollar valuation from investors. Now Sarah Wang and general
Speaker 1: partner over At and Reason will join the company's board.
Speaker 1: As part of the deal, Teshiba accepted buy out an
Speaker 1: offer from Japanese consortium, moving a step closer to ending
Speaker 1: years of turbulence for the company. Seventeen Japanese companies and
Speaker 1: six domestic financial institutions will participate in this buyout. It's
Speaker 1: led by the domestic private equity company Japan Industrial Partners.
Speaker 1: The fifteen billion dollars bid I sent the US listed
Speaker 1: shares rising more than nine percent in New York, the
Speaker 1: most since October. And finally, let's check out Forward because
Speaker 1: it is predicting losses in the EV business that will
Speaker 1: grow to three billion dollars this year as it spends
Speaker 1: big on new models and factories to take on of course, Tesla,
Speaker 1: the deficit matches and accumulated EV losses over the past
Speaker 1: couple of years. The company, well, it's keeping its profit
Speaker 1: forecast for the current year unchanged. Let's get back to
Speaker 1: world of technology. Let's get back to TikTok. Of course,
Speaker 1: CEO giving testimony on the Hill, we're worried about the
Speaker 1: security concerns around the app will show too. Of course,
Speaker 1: it's continuing to try and broaden out this conversation not
Speaker 1: just on TikTok's data privacy, but the intire social media
Speaker 1: industry at large. He says, the companies Project Texas. Of course,
Speaker 1: that plan to far wall all US user data in
Speaker 1: the United States is more than some other companies can promise.
Speaker 1: So it's TikTok only app of concern. Ivan Sereny is
Speaker 1: with us. He is founder and CEO of Ferrut. It's
Speaker 1: a startup that provides technology solutions for corporate customers dealing
Speaker 1: with so called data creep, helping them comply with privacy regulation.
Speaker 1: What's so fascinating, Ivan about the reporting that you've just
Speaker 1: been doing, is that well a report that you what
Speaker 1: was it? Reviewed websites and more than three thousand, five
Speaker 1: hundred companies and basically you're seeing so called tracking pixels
Speaker 1: from TikTok's parent company present and even some government websites.
Speaker 1: Can you tell us about how difficult courtailing data collection
Speaker 1: will be for TikTok? Yes, thanks for asking. It's a
Speaker 1: very great question. That's one of the things that the
Speaker 1: far Wall is really eye opening is just how many
Speaker 1: big sourcing trackers are actually collecting sensitive user information without
Speaker 1: ever asking for consent, and very often without even companies
Speaker 1: whose websites they are running on being aware of those
Speaker 1: pixels and truckers being present there, and that it is
Speaker 1: very very common. It is not just a TikTok concern.
Speaker 1: It's broader concerned obviously, because there's it's you know, we've
Speaker 1: seen Google Matter and there will be Microsoft, all kinds
Speaker 1: of tech companies being present there. But what is really
Speaker 1: concerning is that, for example, by Dance and TikTok were
Speaker 1: bank by executive orders and there were still present on
Speaker 1: government websites. So if we do see a ban, for example,
Speaker 1: of TikTok here in the United States, does it do
Speaker 1: anything well? Band or change of ownership or a band
Speaker 1: will not necessarily solve all the problems. Kind of once
Speaker 1: since for all, what I believe is really concerning is
Speaker 1: that there is no governance around what actually happens with
Speaker 1: the data that is being collected. It's less of a
Speaker 1: band of TikTok, more of having clear rules for all
Speaker 1: the players to follow and have third party validation, maybe alreading,
Speaker 1: and accountability and responsibility for bodies who do not follow
Speaker 1: their rules and violate them. Can you just for those
Speaker 1: who not particularly adapt to understanding what embedded pixels really mean?
Speaker 1: What is it? What is happening? What is being teased
Speaker 1: out of us in terms of our own data? So
Speaker 1: what are pixels? It's they're just like meny spy balloons.
Speaker 1: Remember that giants by balloon a few weeks ago that
Speaker 1: air force shout out of the sky. So pixels are
Speaker 1: like tiny spy balloons that are embedded into a website's
Speaker 1: role used on every day, like when you book your
Speaker 1: appointment through the doctor, when you are perhaps renewing your
Speaker 1: driver's license, or shopping or doing anything else, and they're
Speaker 1: watching everything you do or a person does. They can
Speaker 1: collect and often we see they're actually drabbing everything that
Speaker 1: you're typing in into the forms like your passwords, your
Speaker 1: precurret numbers, maybe your diagnosis, your health records, and anything else.
Speaker 1: So that's a really big concern with pixels and what
Speaker 1: we've found that they are actually doing. Why if we
Speaker 1: went to executives at not just TikTok, but as you mentioned,
Speaker 1: whether it's be other companies, Microsoft, Meta, what would they
Speaker 1: say they're using them for in a legitimate manner? So
Speaker 1: pixels are legitimate business touls because companies need to market,
Speaker 1: they need to advertise, they need to attract customers, they
Speaker 1: need to grow. So pixels do have very legitimate rules purpose.
Speaker 1: What they don't have is clear rules that they need
Speaker 1: to follow, and very often we've seen that. We've found
Speaker 1: that pixels are doing way more and collecting way more
Speaker 1: information than anyone realizes. Okay, so but how can you
Speaker 1: put the genie back in the bottle If these things
Speaker 1: are already out there? And you've said through your three thousand,
Speaker 1: five hundred companies and organizations that you've looked at, was
Speaker 1: it websites across twenty seven states of US state governments
Speaker 1: are being implicated here? What's to be done? Can you
Speaker 1: clean up the system in any way or is it
Speaker 1: more just about disclosure? Well, cleaning up. There's no magic bullet,
Speaker 1: there's no magic want to say, you know that will
Speaker 1: solve the problem once all overnight. But there are steps. Definitely,
Speaker 1: some jurisdictions already have taken clear steps, like in Europe
Speaker 1: there's GDPR and you know people are being held accountable
Speaker 1: for breaking it. So it's it's a continuous in fourth clarity,
Speaker 1: driving clarity, clarity of what needs to be done, just
Speaker 1: like what has been done in a financial sector, and
Speaker 1: we've seen that the financial sector is now a lot
Speaker 1: more robust because of regulations. I mean, of course you've
Speaker 1: made this data public. Have any of the US stating
Speaker 1: governments that manage the websites come to you and said
Speaker 1: what can be done? Is what are you doing with
Speaker 1: the own data that you're managing to now bring to light? Yes, definitely,
Speaker 1: we've we've been reached out by Department of Justices and
Speaker 1: teams for various states already. And just like in a
Speaker 1: ball Suit Journal article published a few days ago, they
Speaker 1: mentioned that even the states that they have validated where
Speaker 1: TikTok was present and collecting information, that they quickly went
Speaker 1: in and remediated to make sure it's not there, and
Speaker 1: that removed it. So there is technical measures that can
Speaker 1: be put in place to prevent this, but it's there's
Speaker 1: no priority on it or clear variness how common that
Speaker 1: issue is, but it is solvable. Let's also just bring
Speaker 1: in our own audience for a moment. Ivan and we
Speaker 1: went to them sort of ultimately asking to care very
Speaker 1: much about TikTok and whether or not they should sell
Speaker 1: off to a US company, whether whether they even use
Speaker 1: the app. I have to say, seemingly our audience and
Speaker 1: technology focused audience, actually half of them basically don't use
Speaker 1: the app at all. I'm interested in whether you think
Speaker 1: people care about the data the consumer. How would you
Speaker 1: say to them that you should care about where your
Speaker 1: data is ending up. Well, that's a very big question.
Speaker 1: Well why we care or why to care is? First
Speaker 1: of all, it's the free freedom. You know, when it's important.
Speaker 1: Protecting the freedom to be personally is really important. So
Speaker 1: I'm based in Toronto, Canada, and right now there are
Speaker 1: concerns and the talks that there were interference by China
Speaker 1: in the Canadian elections process, for example, or there's many
Speaker 1: other topics that are being brought up in the current
Speaker 1: congressional hearing with the CEO of TikTok, where the data
Speaker 1: is being collected or has been accessed for spine, for
Speaker 1: surveillance on members of the military, members of sensitive groups
Speaker 1: of people. So there's definitely I see personally, there's a
Speaker 1: definitely big impact on us as people maybe not felt
Speaker 1: immediately right away, but over some period of time it
Speaker 1: will definitely creep in and can impact all of us. Ivan,
Speaker 1: thank you for bringing us your data. Ivan Thrainy, the
Speaker 1: CEO and co founder of Furup. We thank him. Meanwhile,
Speaker 1: let's get over to another Chinese related company. Ten Cents
Speaker 1: surging actually more than eight percent and most in about
Speaker 1: four months, with traders citing unfounded talk that China's new premiere.
Speaker 1: That's Jijing Ping's top deputy Lequang toward the company's headquarters,
Speaker 1: though there was a visit from a Communist Party regional
Speaker 1: representative early today, according to the official weechat account of
Speaker 1: a local state media outlet. The rally also comes after
Speaker 1: the China social media leader, of course, came out yesterday
Speaker 1: with news of a resumption in revenue growth. I'll be
Speaker 1: it a tiny bit in its fourth quarter. Coming up,
Speaker 1: we'll talk all things crypto and regulation and more Hahn
Speaker 1: Ventures chrys La Haynes with us. Next, of course, we're
Speaker 1: watching shares a coin base as the company gets SEC
Speaker 1: notice on and they intent to sue over its offerings.
Speaker 1: We're going to digest all of that the Shinali Bassac.
Speaker 1: Let's bring back let's talk Hollywood for a moment. Apple
Speaker 1: is trying to raise its profile there and law subscribers
Speaker 1: into its streaming service while planning to spend big one
Speaker 1: million dollars a year to produce movies that will be
Speaker 1: released in theaters. No less, according to sources, Let's bring
Speaker 1: in Bloomberg's Mark German, who has more and just how
Speaker 1: big a step is this to be teaming up with
Speaker 1: Scorsese and they like and actually bringing it to theaters
Speaker 1: for us to go see. Yeah, the significance here is
Speaker 1: that they're upping this budget for theatrical right, for full
Speaker 1: featured length movies, for movies they want to put in
Speaker 1: movie theaters pretty significantly. Right. They're in talks with a
Speaker 1: movie for with Scorskazy for almost a quarter billion dollars. Right,
Speaker 1: That would probably be the most that they've spent on
Speaker 1: a movie during this whole tenure of Apple TV, plus
Speaker 1: since it launched in twenty nineteen. They're thinking bigger and grander.
Speaker 1: They've seen how Coda has done, They've seen how their
Speaker 1: other shows and movies have done, how they're winning awards,
Speaker 1: Oscars in the like. Right, They're very excited about this.
Speaker 1: They want to keep buying new content, making new content
Speaker 1: as a way to keep people buying subscriptions to TV Plus.
Speaker 1: So this is quite significant, according to the reporting from
Speaker 1: our Thomas Buckley and Lucas Sean but mark to that point,
Speaker 1: They've obviously had success awards, but haven't managed to luring
Speaker 1: people to the streaming service. They've got twenty to forty
Speaker 1: million subscribers versus two hundred million more over at Netflix.
Speaker 1: So why do they think this sort of marketing is
Speaker 1: going to win out? Yeah? I mean, right now, it's
Speaker 1: very clear that Apple is getting a lot of its
Speaker 1: subscribers in Watch on TV Plus on plans like for instance,
Speaker 1: I have T Mobile as my phone carrier, and my
Speaker 1: plan comes with Apple TV Plus, so I'm not paying
Speaker 1: out a pocket to Apple for TV Plus. They have
Speaker 1: some sort of agreement that lets me and other T
Speaker 1: Mobile customers get it for free. Many Apple products these
Speaker 1: days come with three months free of Apple TV Plus.
Speaker 1: It used to be a year free, right. There's the
Speaker 1: Apple one bundles where Apple TV Plus is part of that.
Speaker 1: So it's unclear how many people are paying the six
Speaker 1: ninety nine a month for Apple TV Plus. Clearly Apple
Speaker 1: wants to widen that, right, and the way to do
Speaker 1: that is to get better and better content that you're
Speaker 1: not able to get at competitors like Amazon, Netflix, Hulu, Disney, etc. Obviously,
Speaker 1: Scorsese's a big name, there's other big names. There's an
Speaker 1: Idris Elba TV show coming to TV Plus that I
Speaker 1: saw as I was scrolling through TV plus options last night.
Speaker 1: There was Schmigadoon that was quite popular, Ted Lasso. Everyone
Speaker 1: is talking about severance. Clearly Apple has some cultural hits
Speaker 1: on its hands, and it has so much cash it
Speaker 1: wants to do more and more and more. The only
Speaker 1: pause I have is how do you square that with
Speaker 1: the budget cuts and across the rest of the business.
Speaker 1: But I guess you really have to keep investing, and
Speaker 1: they probably put the bucket for a TV Plus investment
Speaker 1: in the R and D budget rather than the affects.
Speaker 1: Interesting nuances there. We thank you. It's helping some of
Speaker 1: the Cinema chains today as well. Cinema an AMC doing
Speaker 1: well on the back of it, Margam and thank you.
Speaker 1: Let's talk crypto now, with already talked about block earlier
Speaker 1: in the show, shares sinking after the Hindenberg Research says
Speaker 1: it took a short position in that company. Now, let's
Speaker 1: turn to coin Base. It's also under pressure. That's because
Speaker 1: the crypto Exchange says it received a notice from the
Speaker 1: SEC formally declaring these security regulators clans to bring an
Speaker 1: enforcement action against it. Shares currently off by another twenty percent.
Speaker 1: Umgazaan Ali Bass helped talk around this news break It
Speaker 1: analyst Jefferies Mazooo say, basically a food of net revenue
Speaker 1: of Coinbase could be affected by this. Well what's strange
Speaker 1: about this Wells notice and what they've heard from the
Speaker 1: SEC is we've seen the SEC target different companies for
Speaker 1: different products, but this Wells notice seems to be encompassing
Speaker 1: multiple parts of the business at the same time. That is,
Speaker 1: parts of the exchange business, the wallet business, the staking
Speaker 1: as a service business. And therefore you have coin Bass
Speaker 1: executives fighting back and saying that the SEC has been
Speaker 1: neither fair nor reasonable throughout this process. Remember, we have
Speaker 1: seen the tones change from coin Base for the last
Speaker 1: year really be very open and vocal about their coordination
Speaker 1: with the SEC and trying to work with them. So
Speaker 1: things are certainly escalating and coming to a head here
Speaker 1: when it comes to different parts of their business. As
Speaker 1: you see, the stock is certainly reacting to this news.
Speaker 1: But this is a wells notice. This is an intent
Speaker 1: to take action, but not action yet. I think what's
Speaker 1: interesting here is that we don't know where this goes
Speaker 1: from the SEC's perspective, but you do have coin Base
Speaker 1: saying that they welcome a suit and legal action if
Speaker 1: this were to escal eight here. So let's see if
Speaker 1: the two sides really reached a reasonable solution here. But
Speaker 1: certainly the direction of travel has been in the direction
Speaker 1: of fighting about what the meaning of crypto is. Oppenheimer
Speaker 1: analyst saying that the unhealthy regulatory environment is why they're
Speaker 1: currently downgrading the stock. Shinali is gonna be sticking with us,
Speaker 1: just a full disclosure on my part my husband as
Speaker 1: a senior manager over at Coinbase, But nevertheless, we're going
Speaker 1: to dig more into this with Hahn Bench's chief strategy officer,
Speaker 1: Chris Lahine, because you have expertise, you of course have
Speaker 1: a focus on coin Base. Now you're someone who used
Speaker 1: to serve in administrations previously. You understand the conversation that
Speaker 1: needs to go on between new innovative businesses and politicians
Speaker 1: and regulators. I'm interested when coinbas is with the SEC
Speaker 1: more than sixty times over the last nine months, what
Speaker 1: is not working here? Yeah, it's a great question, and
Speaker 1: thanks for having me. I think you guys actually broke
Speaker 1: this news yesterday Bloomberg did so. A couple thoughts here.
Speaker 1: First of all, I do think, just step way back
Speaker 1: that this is part of the broader journey that I
Speaker 1: think any innovative company is going to have, particularly one
Speaker 1: that's trying to ultimately disrupt the status quo of our
Speaker 1: financial system and dealing with regulators who effectively want to
Speaker 1: maintain the status quo. So I think just understanding that
Speaker 1: this is going to be a long journey. I was
Speaker 1: particularly struck by the fact, and I think coin Base
Speaker 1: has made this really clear in their communications yesterday, that
Speaker 1: they effectively went through an SEC process right there. S
Speaker 1: one was reviewed. It was part of the process of
Speaker 1: being able to become a public company, you know, and
Speaker 1: that s one really laid out their business model, and
Speaker 1: so now you have the SEC basically coming back on
Speaker 1: something that had already gone through a review process. And
Speaker 1: I think that really does speak to why coin Base
Speaker 1: has reflected a lot of confidence in terms of where
Speaker 1: they are on the law of the facts and this
Speaker 1: process going forward. And we're in an atmosphere and going
Speaker 1: to your core of your question where you know, basically
Speaker 1: we're getting regulatory action and clarity to enforcement. That is
Speaker 1: not the best way to develop policy in this country.
Speaker 1: I was around way back when in the mid nineties
Speaker 1: when Democrats and Republicans work together passed the Telcoact that
Speaker 1: became the framework for what ultimately became the Internet and
Speaker 1: why it was based here in the US and not
Speaker 1: in other places in the world. And policy through enforcement
Speaker 1: is not the best way to optimize first principle. Yeah,
Speaker 1: what about just recognizing here that coin base is the
Speaker 1: largest US crypto exchange, It's a publicly traded exchange. It
Speaker 1: has been given the blessing of investors as well as
Speaker 1: the SEC. To your point, what would happen if it
Speaker 1: goes down the road of the SEC cracking down in
Speaker 1: a much more significant way? Do you think that the
Speaker 1: ultimate goal here is to stifle the crypto industry, because
Speaker 1: given the publicly traded nature of this company, this would
Speaker 1: be the way for them to do it. Yeah, well
Speaker 1: you have this action. You have a lot of activity
Speaker 1: taking place with quote unquote the banking where any number
Speaker 1: of institutions are purported taking steps to make it harder
Speaker 1: and harder for the crypto sector to do banking in
Speaker 1: this country. You had an Electric Capital report. Electric Capital
Speaker 1: is a venture capital fund here in the valley that
Speaker 1: just the other day was released showing that there's one
Speaker 1: million high quality engineering jobs on the table there are
Speaker 1: going to be created over the next five or six years.
Speaker 1: The real question is not whether those jobs are going
Speaker 1: to be created. The real question is do they take
Speaker 1: place here in the US or do they migrate abroad.
Speaker 1: And what is really telling is that if you look
Speaker 1: around the world, the UK, Caroline, where you were from,
Speaker 1: the EU, Japan, Australia, Dubai, Brazil, all of these places
Speaker 1: are moving pretty aggressively to put a regulatory perimeter around
Speaker 1: crypto to give it a certainty and clarity that folks
Speaker 1: are looking for, but specifically with the intent, as they
Speaker 1: have stated to become crypto hubs. They understand that this
Speaker 1: technology will play a really critical role in the future
Speaker 1: rails of financial systems and want to make sure that
Speaker 1: they actually owned some of that real estate that's really
Speaker 1: in a sharp contrast to where the US is. And ultimately,
Speaker 1: those developers, those engineers, those entrepreneurs are going to follow
Speaker 1: where those countries are going. And I really do fear
Speaker 1: fear as an American that we are seeding our leadership
Speaker 1: role on this. This technology is taking place, it's already happening.
Speaker 1: There's four hundred million people across the world who use it.
Speaker 1: One in five Americans question is it here or abroad?
Speaker 1: We're going to go one minute. Sure they haven't done
Speaker 1: a good enough job at making people feel confident and
Speaker 1: comfortable with using this sort of technology. Yeah, look, I
Speaker 1: think that's a very fair point. I think ultimately a
Speaker 1: part of this is the cryptospace themselves and making sure
Speaker 1: we're demonstrating the utility. The fact that forty percent of
Speaker 1: those folks who hold crypto in the US do so
Speaker 1: because they're using it for remittance purposes. The fact that
Speaker 1: people use stable coins to protect themselves from inflation, to
Speaker 1: get access to a financial system, that they currently don't
Speaker 1: have access to where it's hard for them to have
Speaker 1: access to. So, no question, we need to make the case.
Speaker 1: But it's also really important to remember that we're sort
Speaker 1: of at a phase in this technology that would have
Speaker 1: been early nineties for the Worldwide Web, for early two
Speaker 1: thousands for mobile. Some of these same questions would have
Speaker 1: been posed then as part of the pace of technology.
Speaker 1: AI was first introduced in nineteen sixty eight. Right now
Speaker 1: you're finally getting into a place being able to be
Speaker 1: used Chris lahane Han Ventures, thank you for that. Shinali Bassak,
Speaker 1: We thank you for rushing back to do it. That
Speaker 1: does it for this edition of Bluebeg Technology. Do not
Speaker 1: forget to check out our podcast. Much more conversation online,
Speaker 1: Join us on Twitter. This is Blomberg