Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Speaker 1: DAYBAC podcast, available every morning on Apples, Spotify or wherever
Speaker 1: you listen. It's Friday, the twenty second of March in London.
Speaker 1: I'm Caroline Hepke and I'm Lizzie Verdon.
Speaker 2: Coming up today.
Speaker 3: Apple's value dropped by more than one hundred and ten
Speaker 3: billion dollars as the tech giants legal challenges.
Speaker 1: Mount, the Bank of England inches closer to rate cuts
Speaker 1: as the Hawks retreat.
Speaker 3: Plus Reddit pops Shares in the social media firm rise
Speaker 3: by forty eight percent as investors embrace their AI pitch.
Speaker 1: Let's start with a raundup of our top stories.
Speaker 3: Apple's value has dropped by one hundred and thirteen billion
Speaker 3: dollars as regulators in the US and EU accused the
Speaker 3: tech giant of abusing its market dominance. Once the world's
Speaker 3: most valuable firm, with a market cup of more than
Speaker 3: three trillion dollars, Apple has under formed both the Nasdaq
Speaker 3: and the SMP five hundred this year. The latest slide
Speaker 3: in the tech firms share price comes after US Attorney
Speaker 3: General Merrick Garland sued the company, accusing it of blocking
Speaker 3: rivals from accessing hardware and software features on the iPhone.
Speaker 4: We allege that Apple has employed a strategy that relies
Speaker 4: on exclusionary anti competitive conduct that hurts both consumers and developers.
Speaker 4: For consumers, that has meant fewer choices, higher prices and fees,
Speaker 4: lower quality smartphones, apps and accessories, and less innovation from
Speaker 4: Apple and its competitors.
Speaker 3: Merrick Garland's US Justice Department's lawsuit has been strongly refuted
Speaker 3: by Apple, who called it wrong on the facts and
Speaker 3: the law. The iPhone maker also faces a competition probe
Speaker 3: by the EU, which could lovey penalties of up to
Speaker 3: ten percent of global annual revenue. Earlier this month, Apple
Speaker 3: was hit by a one point eight billion euro penalty
Speaker 3: from the Block of releegations that it shoulds out music
Speaker 3: street rivals on its platforms now.
Speaker 1: The Bank of England took a big step towards cutting
Speaker 1: interest rates at its March meeting. Although the central Bank
Speaker 1: kept interest rates on hold yesterday, none of its policymakers
Speaker 1: are now voting full rate rises, and the Central Bank
Speaker 1: governor Agie Bailey says that the Bank of England can
Speaker 1: cut rates before reaching its two percent inflation target.
Speaker 3: Yeah, we don't have to actually get inflation all the
Speaker 3: way back to target sustainably to cut rates, for instance,
Speaker 3: what we have to do is be convinced that it
Speaker 3: is going to go there.
Speaker 2: We should act ahead.
Speaker 3: Of time in that sense, because we have to be
Speaker 3: forward looking.
Speaker 1: Reacting to those words from the Governor Ajie Bailey, markets
Speaker 1: moved up their expected first rate cut to June Bailey's
Speaker 1: comments bring the Bank Viglin more in line with the
Speaker 1: Fed and the ECB.
Speaker 3: And staying in the UK, we brought you the retail
Speaker 3: sales numbers. UK consumers are the most confident they've been
Speaker 3: about their personal finances in years. This is according to
Speaker 3: the GfK measure, which tracks the way people feel about
Speaker 3: their finances. It rose to plus two in the latest survey,
Speaker 3: as the first positive reading since December twenty twenty one.
Speaker 3: The figures indicate personal budgets remained strong even as the
Speaker 3: Bank of England chose to hold interest rates at that
Speaker 3: sixteen year high.
Speaker 1: Chinese authorities are examining the role of PwC in Evergrand's
Speaker 1: accounting practices after the developer was accused of a seventy
Speaker 1: eight billion dollar fraud. The move ramps up pressure on
Speaker 1: the global accounting giant that order to a slew of
Speaker 1: Chinese property firms before the sector's melt down. Evergrand's alleged
Speaker 1: forward dwarfs that of Enron and has added fuel to
Speaker 1: concern about how widespread such accounting issues are in China.
Speaker 3: Shares in the social media company Reddit have soared by
Speaker 3: forty eight percent after its USIPO. Investors appear to have
Speaker 3: embraced the company's vision of profiting from the growth of
Speaker 3: artificial intelligence. The COO, Gen Wong, says the AI revolution
Speaker 3: is at the center of reddits value proposition.
Speaker 5: Large language models need data to train on, and when
Speaker 5: you look at riddit's corpus nineteen years of human experience
Speaker 5: organized by topic with well in moderation and relevance. That's
Speaker 5: incredibly important to building both a chat capability and the
Speaker 5: freshness of information. So that's an area where you know,
Speaker 5: we see opportunity.
Speaker 2: Read it's Gen Wong, they're speaking to Bloomberg.
Speaker 3: The firm also says it's in the early stages of
Speaker 3: allowing third parties to license access to data on the platform.
Speaker 1: After six and a half years in exile, the man
Speaker 1: who tried to break up Spain is making a comeback.
Speaker 1: Carls Pouche demon led the Catalan independence movement and caused
Speaker 1: Spain's worst political crisis since it became a democracy. He
Speaker 1: is now planning to run for his old job as
Speaker 1: President of Catalan in the May elections.
Speaker 6: I'm not looking for what is most comfortable and less
Speaker 6: risky on a personal level. Not explain to myself after
Speaker 6: having spent six and a half years its defending the
Speaker 6: presidency in exile, now that we have an opportunity to
Speaker 6: restore the presidency, I think that was unjustly illicitly an
Speaker 6: illegally destitute by Article one five to.
Speaker 1: Five Prisdom while speaking there via a translator and referring
Speaker 1: to Article one fifty five that is the controversial law
Speaker 1: that the Spanish government used in twenty seventeen to force
Speaker 1: the regional Catalan administration to obey national law after an
Speaker 1: illegal independence referendum.
Speaker 3: Finally, there are signs of progress towards a possible Guards
Speaker 3: of Peace agreement at the same time as Israel is
Speaker 3: threatening to invade Raffa. This is as the US Secretary
Speaker 3: of State Anthony Blincn is in the Middle East attempting
Speaker 3: to help breaker a deal between Humas and Israel.
Speaker 2: Blomberg's Ed Baxter explains.
Speaker 7: Delegations from Israel, the US, Cutter, and Egypt will meet
Speaker 7: today to try to draw up a plan so that
Speaker 7: the invasion doesn't have to happen. But Israel's Minister for
Speaker 7: a Strategic Affairs, Ron Dermer, on a US podcast says,
Speaker 7: Hamasha infrastructure remains in Rava.
Speaker 8: Which you saw in October seventh, was a genocidal force
Speaker 8: that wants to wipe out all the Jews. And it's
Speaker 8: the first program that we've had since the birth of
Speaker 8: the State of Israel. We have the ability to defend ourselves.
Speaker 7: He says. If there is not a piece deal, the
Speaker 7: assault will happen. Ed Baxter, Bloomberg Radio.
Speaker 1: We're going to delve into the story around Apple and
Speaker 1: the share price drop in just a moment. But there's
Speaker 1: a very interesting piece on the Rumberg terminal from Dave Lee.
Speaker 1: Now Dave I've known for many, many years, and he
Speaker 1: writes on all things technology, and he's always just got
Speaker 1: such a great turn of phrases, one of our opinion columnists,
Speaker 1: and he's saying, look, you can't back Apple into a
Speaker 1: corner that is not what the US should be doing
Speaker 1: this after the case from the DOJS of looking into
Speaker 1: anti competitive behavior. He's saying that actually Apple's authoritarianism is
Speaker 1: what makes an iPhone iPhone and not an Android. He
Speaker 1: talks about you know, fans of Android, you know, saying
Speaker 1: that their phones can do everything that iPhone can do,
Speaker 1: but they ignore that Actually the experience on an Android phone,
Speaker 1: as Dave puts it, is a hot mess.
Speaker 2: Yeah.
Speaker 3: I'm of the Holy Trinity of Apple myself. I'm just
Speaker 3: going to put it out there. I guess what you're
Speaker 3: saying is that androids are clunky. That's what Apple loyalists
Speaker 3: would say. And yeah, Dave puts it really well. He
Speaker 3: says that you don't want the US to force Apple
Speaker 3: to make a worse iPhone.
Speaker 2: Through all this regulation.
Speaker 3: If you level the playing field, it means adding complication
Speaker 3: and friction and insecurity to a device, he says, whose
Speaker 3: success is based on getting rid of those things. So
Speaker 3: this is completely against the very best of the iPhone.
Speaker 1: Well that's one perspective. Should we get the other perspective,
Speaker 1: which is around the regulation. Shares in Apple Yesterday's slid
Speaker 1: by more than four percent, so wiping out that Hunter
Speaker 1: thirteen billion dollars off of Apple's market cap. Investors do
Speaker 1: seem to be spooked by another US lawsuit, also a
Speaker 1: European probe after a big EU fine. Let's bring in
Speaker 1: Bloomberg's Oliver Crook, who's been following all of this for US.
Speaker 1: I'm sure that's not the perspective of the Europeans who
Speaker 1: want to regulate Apple a bit more thoroughly. But firstly,
Speaker 1: what about this Justice Department lawsuit the Biden administration getting
Speaker 1: a bit tougher on tech.
Speaker 9: Yeah, this is very interesting because and there's a meaningful
Speaker 9: set because it's coming out of the United States itself.
Speaker 9: It's perhaps less of a shock to have regulation coming
Speaker 9: out of Europe and having that happen to hit in
Speaker 9: your US firms, as we've seen a lot of that
Speaker 9: in the past, but now it's coming directly from the
Speaker 9: heart of the United States and the DOJ. So this
Speaker 9: is all looking at how you can access hardware and
Speaker 9: software for their iPhone, distributing apps for developers, but also
Speaker 9: harder for people who use the phone to switch it.
Speaker 9: Of course, Apple is firing back, has a very different
Speaker 9: view of thing that they're wrong on the fact, and
Speaker 9: the laws has standardous precedent. They don't want the government
Speaker 9: to get involved in, you know, designing of tech. But again,
Speaker 9: you know, I think the Europeans would argue in a
Speaker 9: number of people in tech is that our very concept
Speaker 9: of how this technology work, our very concept of its experience,
Speaker 9: what we think in our minds of its limits, are
Speaker 9: actually governed by these companies and we, you know, we
Speaker 9: need to be a little bit more expansive in the
Speaker 9: way that we think about these things. The App Store
Speaker 9: is a great example. This is at the heart of
Speaker 9: the European probe and this for Margarete a Vesta here
Speaker 9: is going to be front and center in her attack
Speaker 9: of both yes, Apple, but also potentially Google.
Speaker 3: Yeah, you say, it's less surprising that the EU would
Speaker 3: crack down on big tech. But it's not just Apple
Speaker 3: that's for bearing the brunt to this, it's also Google.
Speaker 3: What exactly is the EU trying to pin them down
Speaker 3: on to find them?
Speaker 9: Yeah, so this is very interesting. So in burnas separate
Speaker 9: this into kind of two different categories. So you remember
Speaker 9: the fine we got about three weeks ago for Apple,
Speaker 9: which is one point eight billion euros, right, and that
Speaker 9: was about the App Store and Spotify and a complaint
Speaker 9: that they had leveled. Since then, you have the Digital
Speaker 9: Markets Act, which is a new regime of regulation coming
Speaker 9: out of that has come into power. That came into
Speaker 9: power in fact that week, the week that we spoke
Speaker 9: to Margaret's investor, who is the architect of it. And
Speaker 9: this gives all kinds of new rules in terms of
Speaker 9: how to govern big tech to deal with exactly some
Speaker 9: of these issues, the anti competitive behavior. And what's interesting
Speaker 9: on this is it also gives us very clear consequences
Speaker 9: if you violate this. They're talking about potentially ten percent
Speaker 9: of international sales on the first violations, up to twenty
Speaker 9: percent if you're a repeat violator. And they're also talking
Speaker 9: about potentially breaking up these companies. So now we understand
Speaker 9: that under the digital market sector, which again we've had
Speaker 9: no legal action for yet from the EU, we understand
Speaker 9: that both Google and Apple are in the crosshairs and
Speaker 9: a lot of this is going to focus on the
Speaker 9: apps and again their dominant position in the market.
Speaker 1: Yeah. Absolutely, And so this is I suppose what investors
Speaker 1: are most concerned about. I mean, how significant is the
Speaker 1: share price drop and the worry about Apple's performance? Yeah?
Speaker 9: Well, I mean, well, Listen, we still can't take away
Speaker 9: from the fact that context of Apple and its absolute
Speaker 9: size and its performance over the last you know, many
Speaker 9: many years, and that is you know, so it's coming
Speaker 9: up from a high base. But it's saying because if
Speaker 9: you do take a step back and you look at Apple,
Speaker 9: what's going on. More broadly, Europe and the US are
Speaker 9: increasingly important markets for Apple because a there's sort of
Speaker 9: much more concern about tech supremacy and China wanting to
Speaker 9: develop its own tech, pushing its own iPhones. And we
Speaker 9: saw that report out earlier this month or last month
Speaker 9: about Apple sales the iPhone down twenty five percent in
Speaker 9: China in just the first few months of the year.
Speaker 9: That is absolutely huge. So that puts the focus on
Speaker 9: Europe and the United States and if they're going to
Speaker 9: be coming under intense regulatory scrutiny in both of those markets,
Speaker 9: which are increasingly important, investors are going to pay attention
Speaker 9: to that and clearly to the tune of over one
Speaker 9: hundred billion dollars worth of market gap yesterday.
Speaker 1: Yeah, absolutely, Oliver, thank you so much for being with
Speaker 1: us this morning and take us through then the Apple story,
Speaker 1: the European perspective, in more blue bags Oliver Crook there,
Speaker 1: so that's one key story. But then also want to
Speaker 1: think a bit about the Bank of England what happened
Speaker 1: yesterday sort of moving closer to interest rate cuts?
Speaker 2: Is there not in London?
Speaker 1: I know you in Dubai, but it doesn't mean that
Speaker 1: you haven't kept to be on Governor Andrew Bailey.
Speaker 2: So he gave a.
Speaker 1: Short sort of clip interview to TV stations yesterday, there
Speaker 1: wasn't a full press conference and he's also there's a
Speaker 1: piece in the Ft this morning from him too. He
Speaker 1: did talk about and told broadcasts in the UK that
Speaker 1: Rake huts and the UK's on the way to winning
Speaker 1: its fight against inflation, so Rake cuts maybe on the way.
Speaker 1: What did you make of the Bank of England decision yesterday?
Speaker 1: I thought that it wasn't as devish as he did.
Speaker 1: We did lose two Hawks in the form of Catherine
Speaker 1: Mann and Jonathan Haskell, but it was still a hold
Speaker 1: and the majority of the committee voted to hold. What
Speaker 1: I thought was interesting in terms of the signaling that
Speaker 1: you ask about, was that you had Andrew Bailey saying
Speaker 1: the bank could cut rates and still be restrictive. So
Speaker 1: you might say maybe that's not so surprising rates are high,
Speaker 1: but actually I think that suggests that rates are coming soon.
Speaker 1: You mentioned the ft interview with the Governor saying that
Speaker 1: rate cuts are in play at future meetings, reiterating the
Speaker 1: point that inflation doesn't need to be at target to cut.
Speaker 1: For me, that acknowledges the point that's been made by
Speaker 1: Swatty Dinger at the Dove on the Committee time and
Speaker 1: time again that there's this lag in monetary transmission. You've
Speaker 1: got to wait for people to refinance their cars, re
Speaker 1: mortgage on their houses, for interest rates to transmit to
Speaker 1: the real economy. That suggests you've got a lag. You
Speaker 1: need to get ahead and you need to cut rates
Speaker 1: sooner rather than later.
Speaker 7: Yeah.
Speaker 1: Absolutely, And I remember speaking to the M and S
Speaker 1: chairman who was saying, look, you know, if a company,
Speaker 1: I mean, if you think about that read across, if
Speaker 1: a company doesn't have big debts, it's not going to
Speaker 1: be you know, rate hikes or rate cuts that then
Speaker 1: get passed through to the price of pasta, you know,
Speaker 1: in his view straight away. So it does, you know,
Speaker 1: it does take time. On the other hand, the Bank
Speaker 1: of England looks to be versus yesterday pre the decision
Speaker 1: actually closer to the FED now, doesn't it?
Speaker 3: Yeah, more so now, But by comparison, both of them
Speaker 3: pretty boring compared to all the other central banks out
Speaker 3: there that surprised US overnight. So you had that quarter
Speaker 3: point cut from the SNB, the Bank of Mexico with
Speaker 3: its first quarter point cut this cycle, Turkey and Taiwan
Speaker 3: with a five hundred basis point and a twelve and
Speaker 3: a half basis point height, respectively. So all of those
Speaker 3: This is why I think that the BOE is a
Speaker 3: bit of a nothing burger.
Speaker 2: Caroline.
Speaker 3: Look, speaking to strategists, they flag the risk that the
Speaker 3: FED lags European central banks in easing this year, and
Speaker 3: HSBC was already warning that the pounds increasingly vulnerable even
Speaker 3: though it's been the strongest in the G seven this year,
Speaker 3: because it could be that the BOE seems dubbish by comparison.
Speaker 3: Our economists conclusion here at Bloomberg Economics and the r
Speaker 3: wise Head is that yes, the data justify a may
Speaker 3: cut from the BOE, but the Military Policy Committee is
Speaker 3: going to be very cautious and it's not going to
Speaker 3: want to cut first of its major central banking pick.
Speaker 2: They didn't get the credit going first.
Speaker 3: On the way in, so they're not going to rush
Speaker 3: to be the first on the way out. This is
Speaker 3: Bloomberg Daybreak Europe, your morning brief on the stories making
Speaker 3: news from London to Wall Street and beyond.
Speaker 1: Look for us on your podcast feed every morning on Apple, Spotify,
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