Speaker 1: From the heart of where innovation, money and power Collie
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay. I'm Emily Jacket, San Francisco, and this is
Speaker 1: Bloomberg Technology coming up in the next hour. In video
Speaker 1: misses on revenue by more than a billion dollars, assigned
Speaker 1: demand for PCs, gaming consoles and other electronics might be
Speaker 1: drying up after a two year pandemic boom. We'll talk
Speaker 1: about just how long the slump could last. Plus, Apple
Speaker 1: is being picky when it comes to M and A,
Speaker 1: why the iphonemaker has slowed down its buying spree despite
Speaker 1: a one seventy nine billion dollar war chest. And is
Speaker 1: Facebook really the underdog now or are we underestimating it
Speaker 1: will count the way in which TikTok still doesn't even
Speaker 1: come close to Meta. All of that in a moment,
Speaker 1: but first, sticking with in video, the graphics chip giant
Speaker 1: missing its own quarterly revenue projections by more than a
Speaker 1: billion dollars evidence that demand for electronics components is drying
Speaker 1: up after a two year pandemic boom boom. Brooks I
Speaker 1: and King, who covers all things semiconductors, joins US now
Speaker 1: and wow, a billion dollars miss is not something you
Speaker 1: normally associate with Jentsen Wong and in video what happened? Yeah,
Speaker 1: I mean, it's it's not a surprise that it happened,
Speaker 1: given what Intel had said, what am D had said,
Speaker 1: what other PC related kind of components make as it said.
Speaker 1: But I think the extent to which they fell short
Speaker 1: and the sort of rapidity with which demand has obviously
Speaker 1: fallen away has obviously caused a lot of concern. And
Speaker 1: that's what the analysts and investors have been talking about today.
Speaker 1: Why did they get their own projections so wrong? Yeah,
Speaker 1: I mean they said, oh, it just happens, how quickly
Speaker 1: it fell off, so so rapidly that we didn't see
Speaker 1: this coming. The concern, or, if you like, the underlying
Speaker 1: fish is that it's not just consumers and not just
Speaker 1: gaming related, but also this crypto dependency that they said
Speaker 1: that they've shared, Our chips aren't good for crypto mining anymore,
Speaker 1: you don't need to worry about that. But then we
Speaker 1: see cryptocurrency has obviously been to a rough time, no
Speaker 1: reason to be mining in a lot of situations. Now,
Speaker 1: maybe those cards are coming back into the gaming market.
Speaker 1: They also pre announced. I mean, how unusual? Is this
Speaker 1: relatively unusual? But again, to be fair to Nvidio, at
Speaker 1: least they did. One of the big themes on Intel's
Speaker 1: kind of disaster at call last week was why didn't
Speaker 1: you pre announce when it was so bad? You know,
Speaker 1: investors don't like surprises. The fact that they did is,
Speaker 1: as you say, unusual. But at least they're being forth
Speaker 1: right and they're being given some credit by at least
Speaker 1: some of the analysts for doing that. So are they
Speaker 1: clearing inventory? And is this something that will be cleared,
Speaker 1: you know, say by the next quarter. That's that's the
Speaker 1: positive scenario. The positive scenario says, this is what the
Speaker 1: chip industry does. They over build, They get it wrong.
Speaker 1: They can't match these supply with short term demand movements.
Speaker 1: As soon as we clear out the inventory, we're back
Speaker 1: to normalize situation. Everything's okay. That's a positive picture. The
Speaker 1: negative is like consumer demand. Meantime, they've been investing in
Speaker 1: the server market and that's actually helped kind of cushion
Speaker 1: the blow. Right, Yeah, no, absolutely right. That's why they're
Speaker 1: the world's most valuable chip company because they've built this
Speaker 1: incredible service business. But even that missed today. So what
Speaker 1: does they say about the broader state of the chip industry.
Speaker 1: I mean, did anybody expect the pandemic boom to to
Speaker 1: last indefinitely? I mean, come on, you're remembering it perfectly.
Speaker 1: How many times, right did we talk about this? How
Speaker 1: many times did chip an industry CEOs tell you things
Speaker 1: are different now? The PC market is a much higher level.
Speaker 1: Everything's okay. Every household needs three or four PCs. Everything's
Speaker 1: going will be okay. And here we are in the
Speaker 1: middle of two two saying that's absolutely not true. All right,
Speaker 1: and King, thank you for all the extra details there.
Speaker 1: We'll be watching shares of Galaxy Digital rising Monday despite
Speaker 1: reporting a five million dollar loss. Bloomberg Shinneli Bassa and
Speaker 1: Caroline I spoke with Novegrats about the state of the
Speaker 1: crypto winter. Take a listen. We've had one credit loss
Speaker 1: in the history of our company, and uh, you know,
Speaker 1: I disclosed the name today. It's a manageall lost relative
Speaker 1: to our balance sheet, relative our credit business. Our credit
Speaker 1: business actually was profitable on the on the quarter. I
Speaker 1: feel pretty good about that. What we saw away from
Speaker 1: us was huge concentration in this one name, which created
Speaker 1: a lot of the systemic risk that we saw. Uh,
Speaker 1: and the and the cascading of bitcoin all the way
Speaker 1: eighteen thousand um. You know, I I don't have a
Speaker 1: crystal ball when I add up the total planes that
Speaker 1: people filed. Uh, it doesn't feel like there'll be a
Speaker 1: lot comes back in that case. You know, you've got Celsius,
Speaker 1: You've got Voyager, You've got lots of other places where
Speaker 1: both institutions and retail lost a lot of money, and
Speaker 1: there will be a business for that where people are
Speaker 1: bidding up. I want to double down on retail because
Speaker 1: you brought it up. You know, you mentioned earlier that
Speaker 1: your skeptical of a soft landing, and to the extent
Speaker 1: that means you mean there's a recession coming that it
Speaker 1: will be a hard landing. How much money will there
Speaker 1: really be on the sidelines to put into crypto, let
Speaker 1: alone any risk asset. Listen, you know, the FED increased
Speaker 1: money to supply at a rate that we've never seen before,
Speaker 1: and they're slowly withdrawing that. There's still a ton of
Speaker 1: money in the system, right There was excess savings in
Speaker 1: retail that's getting worn down some. But there's monster casualties.
Speaker 1: People got really nervous, and we had a pretty dramatic
Speaker 1: sell off in the first half of the year. And
Speaker 1: so I don't think we're going to see what we
Speaker 1: saw last year when money is flowing in and it's
Speaker 1: all it's all booming. But I don't think it's armageddon
Speaker 1: here yet either. Uh And so again I I, you know,
Speaker 1: will Bitcoin get through thirty thousand on this move up,
Speaker 1: We'll see. I'm doubtful. I think we're gonna probably be
Speaker 1: in this range now. I'm quite frankuively be happy if
Speaker 1: we're in a a you know, twenty two thousand or
Speaker 1: twenty thousand thirty thousand range for a while. With the
Speaker 1: next move breaking up, hearium has got a little bit
Speaker 1: more juice at the top of its range. It can
Speaker 1: be you know, makes out, it could go higher. That's
Speaker 1: got a real story. But I don't see, you know,
Speaker 1: the mania that we saw in one or twenty seventeen reigniting. Listen.
Speaker 1: I hope are wrong. Galaxy Digital CEO Mike novograts there. Meantime,
Speaker 1: Apple used to acquire a company every three to four weeks,
Speaker 1: but it's dramatically slowed. It's dealmaking in the last two years.
Speaker 1: Apple spent one a app billion dollars on payments tied
Speaker 1: to acquisitions in fiscal year twenty, but just over two
Speaker 1: hundred million dollars in the last ten months. Brig Smart
Speaker 1: German here to discuss. So why is Apple slowing down
Speaker 1: the pace of deal Smart that's a good question. Well,
Speaker 1: when you look at this chart, when you think about it,
Speaker 1: the first two things you might you know, the reasons
Speaker 1: you might propose as one, COVID Right, COVID messed up.
Speaker 1: You know everyone's business plan. You have to tear it
Speaker 1: all up and start over. Right. The second is regulation.
Speaker 1: Obviously you have the FTC going after in video Microsoft deals,
Speaker 1: you have the act Division deal for nearly seventy billion dollars,
Speaker 1: you have Meta Amazon, all these players spending so much
Speaker 1: money and the regulators assuming them and trying to get
Speaker 1: in their way. And so maybe Apple is fearful of that,
Speaker 1: as a new note inside of the regulatory filings to
Speaker 1: the SEC may suggest. But I think it's really neither
Speaker 1: of those, because you look, that was really the height
Speaker 1: of the pandemic. In that year they spent more than
Speaker 1: they had since right. I also think that Apple is
Speaker 1: not spending amounts of money that necessarily would lead to
Speaker 1: scrutiny from the FTC. You know, their government's globally right,
Speaker 1: So I think this is a matter of fact of
Speaker 1: their product development schedule. One, two investing in other areas,
Speaker 1: and three maybe they're trying to go at it more alone, right,
Speaker 1: without needing to acquire companies. But at the same time,
Speaker 1: this is extremely odd. I would bet that most people
Speaker 1: don't know that Serie face, I D Touch, I D
Speaker 1: Apple Music, Apple News, the weather app. I could sit
Speaker 1: here for ten minutes giving you a list of iPhone
Speaker 1: features that we all use every day. Those all stemmed
Speaker 1: from acquisitions, and so buying smaller companies and startups and
Speaker 1: core technologies and engineering teams has been core to the
Speaker 1: Apple development process ever before, since Steve Jobs even returned
Speaker 1: to the company in the late nineties. That's interesting because
Speaker 1: Apple has never been one to make big acquisitions, certainly
Speaker 1: not to the scale that Mark Zuckerberg has. For example,
Speaker 1: How how is them not making these smaller acquisitions over
Speaker 1: at least the last year going to impact the product
Speaker 1: development cycle? You know, I would look at it this way.
Speaker 1: I think that these acquisitions have helped Apple get to
Speaker 1: where they want to get much more quickly, right and
Speaker 1: at lower costs, you know, per se Right, I'll give
Speaker 1: you my favorite Apple acquisition is probably authentic back in right,
Speaker 1: they bought that company, and all that company did was
Speaker 1: make very secure and reliable fingerprint scanners, right, and that
Speaker 1: that led to touch I D on the iPhone five s.
Speaker 1: Remember how cool that was? Right? And so those little things,
Speaker 1: even though they're not big deals, led to some pretty
Speaker 1: cool features that have helped them sell new phones. Right.
Speaker 1: And to answer your question, I think they should really
Speaker 1: be snapping up autonomous car companies, car companies in general
Speaker 1: car manufacturing to really bring that Apple car closer to fruition.
Speaker 1: Remember when Elon Musk said that Apple buying Tesla on
Speaker 1: the table for a market cap around sixty billion, was
Speaker 1: on the table about five years ago before the Model
Speaker 1: three came out. Imagine if Apple would have bought Tesla
Speaker 1: back then, how different the our industry would look today
Speaker 1: for just a sixty billion dollar deal. And when I say,
Speaker 1: just if you compare a sixty billion dollar deal compared
Speaker 1: to Apple's cash balance over the last decade or so, right,
Speaker 1: it is small potatoes. So I think their acquisition strategy
Speaker 1: has paid off in a lot of ways, but we're
Speaker 1: seeing some changes here, at least for the last two
Speaker 1: fiscal years. All right, Mark German and Ali, Thanks Mark
Speaker 1: as always. Thanks all right. Coming up digital rights in
Speaker 1: a post row world. How to navigate what can and
Speaker 1: can't be used against you when it comes to your
Speaker 1: web searches. That is next. This is Bloomberg. Their companies
Speaker 1: provide a very important service that allows people to access
Speaker 1: information about their healthcare. Tech companies could choose to uh
Speaker 1: provide that information, provide free security services to websites disseminating
Speaker 1: that information so they're protected from vigilante hackers. The other
Speaker 1: things that tech company can do is become very prepared
Speaker 1: to go into court and actually pushed back against the
Speaker 1: requests that they get from law enforcement. They have enough
Speaker 1: data on all of us to serve their business model.
Speaker 1: They don't need data about people's private health choices in
Speaker 1: order to make money. And if they are disregarding the
Speaker 1: rights and welfare of the people that they are serving
Speaker 1: through the technologies that they provide, those people are going
Speaker 1: to be less and less able to participate. As abortion
Speaker 1: restrictions tighten in various states across the United States, questions
Speaker 1: remain about privacy. How will new laws be enforced in
Speaker 1: the digital age. Privacy advocates warn that location and other
Speaker 1: kinds of data could be used to track individuals who
Speaker 1: visit abortion clinics or travel across state lines. Joining me
Speaker 1: out to dig deeper into this is Alexandra Gibbons, President
Speaker 1: of the Center for to Democracy and Technology. Alexandra, thank
Speaker 1: you so much for joining us. So what's not being
Speaker 1: talked about? Um when we think about the power that
Speaker 1: these companies have and that the threat that our information
Speaker 1: could be used against us. I think this really is
Speaker 1: a wake up moment for the tech companies to think
Speaker 1: about the sheer amount of information that they have and
Speaker 1: to know that their users want that information to be protected.
Speaker 1: So we need companies thinking about just how much data
Speaker 1: they collect, how long they store it for, where they're
Speaker 1: sharing it with, and getting really smart about how they
Speaker 1: respond to law enforcement requests as well. What kind of
Speaker 1: data are you most worried about that these companies have.
Speaker 1: So right after the news of the overturning of rovi
Speaker 1: weight came out, there was a big conversation about period
Speaker 1: tracking apps and that matters. But users need to realize
Speaker 1: that there's a lot more they should be focused on.
Speaker 1: We're talking about your browser information, what websites you visited,
Speaker 1: your search history, your online purchases of some he purchases,
Speaker 1: medication that could be used in the case of an abortion,
Speaker 1: and then also the subject matter of your texts and emails,
Speaker 1: and finally your location information, which we can be collected
Speaker 1: by your phone, by apps on your phone, and also
Speaker 1: by your Internet service provider as well. How should tech
Speaker 1: companies prepare themselves to deal with this? They need to
Speaker 1: think about a couple of different things. One is just
Speaker 1: their data collection practices. In the first place, we're about
Speaker 1: to enter a world where law enforcement is asking these
Speaker 1: companies to hand over their customers most sensitive information for
Speaker 1: prosecutions that are wildly unpopular when you look at the
Speaker 1: broader American public. So companies need to think about what
Speaker 1: they're collecting, how long they're keeping it for, and then
Speaker 1: also how they are responding to these law enforcement requests.
Speaker 1: If they get them. They need to be requiring a warrant.
Speaker 1: They need to be fighting to make sure that those
Speaker 1: warrants are narrowly tailored. They need to be pushing back
Speaker 1: for law enforcement doing overbroad phishing expeditions, and they need
Speaker 1: to be telling users about the request that they're getting
Speaker 1: so we can have more transparency in the space. You've
Speaker 1: also talked about how worried you are about a chilling
Speaker 1: effect on free speech when it comes to information around abortion.
Speaker 1: Can you explain that there's a big conversation to be
Speaker 1: had here around online content moderation, So how companies can
Speaker 1: make sure that they're helping people get access to reliable,
Speaker 1: accurate information about abortion services, pushing away miss and disinformation,
Speaker 1: and then also just pushing back on the growing number
Speaker 1: of state laws were likely to see of state legislatures
Speaker 1: trying to make it illegal to post online information about
Speaker 1: how to access reproductive care. So we need the companies
Speaker 1: to be thinking about what they're curating, what are the
Speaker 1: signals they can put online to help give access to
Speaker 1: good health care information fairly similar to what they've had
Speaker 1: to do under COVID really um and also make sure
Speaker 1: that they are not, you know, falling for these statutes
Speaker 1: that try to access limit access to good information about
Speaker 1: reproductive air. Are there ways that big tech companies could
Speaker 1: help women wanting to make this choice or who feel
Speaker 1: like they have no choice but to make this quote
Speaker 1: unquote choice. Yeah, I mean, it's all about knowing your options, right.
Speaker 1: It's about a woman being able to understand the circumstances
Speaker 1: that she's in and make an informed decision. And so
Speaker 1: some of the things that we've seen companies do which
Speaker 1: I admire and like, is, for example, of a person
Speaker 1: searches for abortion services, what are the ads that can
Speaker 1: come up against that search, you know, down the bar
Speaker 1: on the side of your search engine. How do we
Speaker 1: make sure that those are from certified providers, They are
Speaker 1: trusted ads, They're not from places that actually are trying
Speaker 1: to trap people that are seeking information about abortion care.
Speaker 1: And we have reason to believe in this climate, the
Speaker 1: crisis pregnancy centers, which come from the anti abortion movement
Speaker 1: might well be trying to target people who are running
Speaker 1: those searches. So there are things like that, What are
Speaker 1: the indicators for trusted information that platforms can do? And
Speaker 1: then how can they really quickly respond to fraudulent websites,
Speaker 1: websites that are trying to entrapt people seeking information for
Speaker 1: care and d escalating the spread of viral miss and
Speaker 1: disinformation about abortion services as well. What are your biggest
Speaker 1: fears about how technology could potentially be used against us.
Speaker 1: I think they're starting to become true already, which is
Speaker 1: the care of the fear that these are going to
Speaker 1: be used in prosecutions. And also when you look at
Speaker 1: some of these state statutes, it's not just law enforcement
Speaker 1: prosecutions against people who are seeking or providing reproductive care,
Speaker 1: but there are some statutes out there that authorized individual
Speaker 1: citizens to go out as private bounty bounty hunters and
Speaker 1: follow their own lawsuits against people that they suspect of
Speaker 1: aiding and abetting abortions. That's really dangerous because it creates
Speaker 1: this incentive system for you know, the Wild West, for
Speaker 1: lone rangers to go out there be tracking down information
Speaker 1: about their neighbors, bringing these lawsuits with the promise of
Speaker 1: the state paying them a ten thousand dollar bounty if
Speaker 1: they do so. That is a really worrying environment for
Speaker 1: people's privacy and ability to access good information online. So
Speaker 1: that is the type of landscape that the tech companies
Speaker 1: just should not want to get themselves in the middle of.
Speaker 1: And that is why we need the tech companies really
Speaker 1: limiting their collection of sensitive health information that could be
Speaker 1: used to create an inference that somebody has accessed abortion
Speaker 1: services or any other type of reproductive care that could
Speaker 1: expose them to litigation or prosecution. It's potentially very terrifying.
Speaker 1: Have you seen any particular examples, UM, where this has
Speaker 1: happened or where this is happening already? So there have
Speaker 1: already been cases, even before the overturning of Roe v. Wade,
Speaker 1: there were women who were being prosecuted for their pregnancy outcomes,
Speaker 1: being accused of self inducing miscarriages late in their term.
Speaker 1: And what was used in those prosecutions where people's browsing histories,
Speaker 1: their online purchase history evidence that they had purchased certain
Speaker 1: medications online. And then even in one case, the subject
Speaker 1: and the contents of a woman's text messages with a
Speaker 1: friend as she was trying to get it vice on
Speaker 1: what to do. So we've seen already in these cases
Speaker 1: that digital evidence can be used in evidence against you.
Speaker 1: And so that's a reason why users need to be
Speaker 1: careful and why the companies really need to be watching
Speaker 1: us as well. Chilling indeed, Alexander Gibbons, thank you for
Speaker 1: shedding light on this issue. Really appreciated. President of the
Speaker 1: Center for Democracy and Technology, UM, thank you for stopping by.
Speaker 1: Welcome back to Bloomer Technology, and Emily Check in San Francisco.
Speaker 1: SoftBank says it will sell some or all of its
Speaker 1: shares in so far reported holdings equivalent to a nine
Speaker 1: percent steak. Soft Bank reporting a record net loss as
Speaker 1: a self and Global Tech Stocks continues to hammer its
Speaker 1: Vision Fund portfolio. I want to get back to markets now.
Speaker 1: Shares of EV makers and clean energy companies jumping after
Speaker 1: the US Senate passed a landmark bill on climate or
Speaker 1: at Ludlow back with the movers. Yes, So the bill
Speaker 1: moved those you'd expect them to a lot of EV
Speaker 1: main names. Three seventy four billion dollars of energy and
Speaker 1: climate spending is ear marks. You look at names like
Speaker 1: Tesla actually been up much higher around five percent, but
Speaker 1: closing up eight tenths of one percent, and some of
Speaker 1: these smaller EV makers and legacy names like GM and Ford.
Speaker 1: It ends the per manufacturer limit on the seventy dollar
Speaker 1: tax credit, which is something we'd expected, had been negotiated
Speaker 1: for many months, and of course that scene as a
Speaker 1: tail wind for demand. But there are price limits. Anything
Speaker 1: over fifty five dollars for an evy car or sedan
Speaker 1: is not eligible, and anything over eighty dollars for a
Speaker 1: pickup or suv is not eligible. But this is what
Speaker 1: we've been waiting for the government to kind of give
Speaker 1: this industry a bit of a push get it going.
Speaker 1: Not done much for the stock so far this year, though,
Speaker 1: you look at the performance of Tesla versus legacy names
Speaker 1: like G and Forward year to date, there's still under
Speaker 1: pressure and we're still seeing different declines. But I walk
Speaker 1: over to this side of the screen and you do
Speaker 1: see Forward in particular closing that share gap on tests
Speaker 1: or in terms of year to date performance because they
Speaker 1: are starting to ramp up their own activity, and again
Speaker 1: with government support, there is hope that they'll see more.
Speaker 1: It wasn't just evs as well. There are measures within
Speaker 1: the bill for support for renewable energy, not just in
Speaker 1: the form of solar, but also in hydrogen plug in
Speaker 1: as well, and you see some names here across solar
Speaker 1: moving pretty significantly on the back of that bill being
Speaker 1: negotiated overnight. Not all the way there goes to the
Speaker 1: House next for the expectation, even though this is trimmed
Speaker 1: out down from where we started a year ago, is
Speaker 1: that this is a really big play ultimately to reduce
Speaker 1: common mission from where we were in two thousand five.
Speaker 1: Interesting development, All right, thank you well. Mark Zuckerberg's new
Speaker 1: narrative from matter has consistently involved pitching Facebook's platforms as
Speaker 1: the underdog, especially when it comes to regulation and competition.
Speaker 1: But Facebook may be in a better position to take
Speaker 1: on TikTok than Zuckerberg is leading the public to believe,
Speaker 1: according to Bloomberg Business Weeks Max Chaffkin, in a different
Speaker 1: regulatory environment, Zuckerberg might simply try to buy TikTok. That's
Speaker 1: not possible at the moment. Thus his strategy is evolving.
Speaker 1: Max Chafkin joins me, Now, so does anybody really believe
Speaker 1: Mark Zuckerberg when he says Meta is an underdog? Well,
Speaker 1: I mean we've seen, uh yeah, a bunch of raft
Speaker 1: of stories all about the the you know, existential challenges
Speaker 1: facing Facebook, and of course investors have sent the stock
Speaker 1: down something like since February, so so they're definitely people
Speaker 1: out there with concerns, and I think what's happening is
Speaker 1: that Zuckerberg is kind of leaning into them. So you
Speaker 1: do have um economic challenges, right, So Facebook really benefited
Speaker 1: from COVID stay at home orders and the sort of
Speaker 1: explosion of e commerce shopping that's all gone away, and
Speaker 1: then you do have this kind of cultural challenge where
Speaker 1: TikTok is, you know, getting a lot of mind here.
Speaker 1: It seems like a lot of the younger people, of course,
Speaker 1: are are into TikTok. They're not into Facebook. And Z
Speaker 1: were using that and saying, you know, we're we're really
Speaker 1: in trouble. We need to We're gonna have this intense period.
Speaker 1: He's kind of rattling the saber in terms of hiring,
Speaker 1: telling employees you know, they shouldn't take vacations and and
Speaker 1: you know they need to weed out the bad performers.
Speaker 1: And I think this is as you say, it's strategic. Um,
Speaker 1: it's both an effort to try to get more productivity
Speaker 1: out of his staff um, and also kind of a
Speaker 1: positioning thing because Facebook faces um serious and I trust
Speaker 1: scrutiny on a couple of different fronts, and playing up
Speaker 1: challenges from competition is of course one way to uh
Speaker 1: to kind of diffuse a situation. How would you assess
Speaker 1: Facebook position of power with respect to TikTok? You know,
Speaker 1: what does Facebook have on TikTok and what is TikTok's
Speaker 1: actual advantage. Yeah, so Facebook, it's really easy to to
Speaker 1: sort of forget this. But Facebook is like way, way,
Speaker 1: way bigger than TikTok. We we don't know, uh, exactly
Speaker 1: how much money TikTok is making, but you know, independent
Speaker 1: estimates put it at at four billion dollars in revenue
Speaker 1: in and so on. Facebook, you know, is something like
Speaker 1: over a hundred billion dollars right there. They're making like
Speaker 1: eight times TikTok's revenue in profit for the year. Now,
Speaker 1: TikTok could you know, and and there is a lot
Speaker 1: of chatter about this. You know, TikTok gonna sort of
Speaker 1: turn on the cash machine and and it's going to
Speaker 1: find ways to make money. But but they haven't done
Speaker 1: that yet. And there's really no reason to think that
Speaker 1: they will be any better at monetizing than Mark Zuckerberg is.
Speaker 1: Because what Facebook is, Bill, is this kind of incredible
Speaker 1: cash machine for turning online attention into into revenue. And
Speaker 1: he has, as you know, has been well documented, basically
Speaker 1: a monopoly on on social media advertising, and TikTok is
Speaker 1: certainly eating into that. But but really it's a very
Speaker 1: long way away from um, you know, eating Mark Zuckerbook's
Speaker 1: lunch that said, TikTok does seem to be way way
Speaker 1: way inning the attention war with Facebook, or is that
Speaker 1: also a misperception. Well, I think that's absolutely true, but
Speaker 1: it's easy to forget that lots of other companies have
Speaker 1: won this attention word Facebook. You know, there's been a
Speaker 1: lot of people have pointed out that Facebook's kind of
Speaker 1: lost it's cool or something like that. But what that
Speaker 1: kind of overlooks is it's lost it's cool for like
Speaker 1: the last ten years, right, Facebook lost its school first
Speaker 1: to Instagram. Uh there was you know, Twitter was the
Speaker 1: hot thing for a while, and over time Mark Zuckerberg
Speaker 1: has found ways to maneuver the company. And now there
Speaker 1: is one important difference. Whereas in the past, you know,
Speaker 1: he would have just bought TikTok, right, that is not
Speaker 1: possible because of FTC scrutiny. You know, he could try,
Speaker 1: but it seems almost certain that the government would try
Speaker 1: to block it, given that they're trying to block this
Speaker 1: much smaller acquisition. So that's something that is not available
Speaker 1: to him. But what is available to him is copying,
Speaker 1: and we're seeing Facebook do that with its reals product
Speaker 1: and with these efforts to to have more you AI
Speaker 1: driven discovery, basically a TikTok like intervace. Those are the
Speaker 1: complaint that that's what led to all these complaints from um,
Speaker 1: you know, Instagram influencers and Kardashian adjacent UM types. UM. Now,
Speaker 1: But the thing is, we know this is working in
Speaker 1: part because Facebook has said one reason their revenue is
Speaker 1: lower has been lower, is because they're driving users into
Speaker 1: these TikTok like platforms which do not monetize as well.
Speaker 1: So they're making a choice. They're choosing, you know, copying
Speaker 1: TikTok versus driving revenue. And on one hand, you can say,
Speaker 1: well that that bodes ill, right, that that suggests they're
Speaker 1: not monetizing. Well, on the other hand, it does look
Speaker 1: like they're making progress in terms of this copycat approach.
Speaker 1: And again I don't don't see any reason to think
Speaker 1: that it won't work. It's worked, you know, many times
Speaker 1: before in the history of this company. All right, great
Speaker 1: piece by you, UM Bloomberg Business Week, Max Chafkin as
Speaker 1: always great to have you come up. Bitcoin and coin
Speaker 1: based both rallying is winter getting a little warmer? F
Speaker 1: t x U S president Brett Harrison joins to weigh
Speaker 1: in on that question. Next, this is Bloomberg coin Bay
Speaker 1: shares rallied for a fifth straight day as investors continue
Speaker 1: to pile into the largest US crypto exchange following news
Speaker 1: of its partnership with black Rock to help institutional investors
Speaker 1: manage and trade bitcoin. This as Bitcoin also rallying breaking
Speaker 1: above the dollar mark. Welcome news for the crypto platform
Speaker 1: ahead of its second quarter results after the close of
Speaker 1: market later this week. Here to discuss what's happening this winter,
Speaker 1: I want to bring in f t x U S
Speaker 1: president Brett Harrison for his read on this and much
Speaker 1: more so, what do you make of this coin based
Speaker 1: black Rock news, Brett? So, it does seem to be
Speaker 1: that the winter is starting to though here. Um, you know,
Speaker 1: prices are obviously rising, and what's what are we actually
Speaker 1: seeing here? A lot of these forced liquidations in the market,
Speaker 1: they're start they're starting to come to an end. Um,
Speaker 1: No more news about different either exchanges or lending platforms
Speaker 1: going under, voyagers returning funds, large undeployed, bigger capital starting
Speaker 1: to be deployed again. And then of course this news
Speaker 1: coming out with coin base and with black Rock, showing
Speaker 1: that the institutional demand to be able to trade crypto
Speaker 1: through some of the more traditional huge players in the
Speaker 1: market is not slowed down, and in fact, as the
Speaker 1: saying goes that this is the time to build, people
Speaker 1: are obviously building now, and as we start to come
Speaker 1: out of this win term, people are trading again the
Speaker 1: tools the capital will be in place to do so.
Speaker 1: And of course all of this against the backdrop of
Speaker 1: more progress in Congress uh Savan now Boosmen coming out
Speaker 1: with their big crypto bill, a lot of positive signs
Speaker 1: around that, all in bringing positive sentiment to crypto markets
Speaker 1: and to the equity markets that are relating to crypto. Still,
Speaker 1: you've got coin base and robin Hood slashing their head count.
Speaker 1: What mistakes do you think these companies made when they
Speaker 1: were scaling? You know, looking across the growth text sector,
Speaker 1: there are so many companies talking about either layoffs or
Speaker 1: hiring freezes. I mean everything from guest coin based in
Speaker 1: robin Hood, but also Google and Microsoft and Tesla. I
Speaker 1: think there's a real lesson learned here, which is that
Speaker 1: these growth companies, which typically have operated under the model
Speaker 1: that headcount growth is a sign of company growth, are
Speaker 1: realizing that actually sometimes headcount growth can get in the
Speaker 1: way of company growth. If you don't have a lean
Speaker 1: staff where you can prioritize the most important buildouts, where
Speaker 1: you can get things done, you can move nimbly. With
Speaker 1: a market that moves extremely criply, like crypto, it's going
Speaker 1: to be difficult to keep pace. And when there's a
Speaker 1: winter and things are slowing down, retail volume is drying up,
Speaker 1: and you have to focus on the most important things.
Speaker 1: That means will have to pull back on those employees,
Speaker 1: which can be devastating to build up this giant workforce,
Speaker 1: and that have to lay those people off who have
Speaker 1: worked so hard for their company. I mean, that's why
Speaker 1: I think that companies like f t X, but of
Speaker 1: course you're not the only company to do this. Showing
Speaker 1: that you can operate with a leaner model, with a
Speaker 1: smaller team and really be able to focus on the
Speaker 1: highest priority items of all time and get things done
Speaker 1: is super important for me. Be able to weather even
Speaker 1: the downturns in the market. F t X has been
Speaker 1: really inquisitive through this winter, and I wonder if winters
Speaker 1: start starting to thaw, how does that impact your strategy
Speaker 1: around deals. Do you expect valuations to stay low or
Speaker 1: start to creep up. And could that mean less opportunities. Yeah, absolutely,
Speaker 1: I mean, as you said, you know, during this past
Speaker 1: let's say a couple of months, there have been a
Speaker 1: lot of opportunities presented to us as far as potential
Speaker 1: deals with you know, other companies that are looking for
Speaker 1: capital injections. UM, they need help, you know, getting back
Speaker 1: in business. There's possible merger opportunities, lower private equity valuations.
Speaker 1: And yes, as as investor confidence starts to come back
Speaker 1: into the sector, I mean those opportunities will start to
Speaker 1: dry up as you know, these companies will start to
Speaker 1: get their volumes back, they'll start to get revenue again.
Speaker 1: Don't want to be able to increase their existing pipeline
Speaker 1: of projects and capital in the same way they were before. Um.
Speaker 1: But there's still plenty of opportunities in the market, and
Speaker 1: certainly ones that we're looking at. Ft X is expanding.
Speaker 1: It's no stock trading fee to all of its US users,
Speaker 1: including non crypto investors. What's the end game here? Is
Speaker 1: robin Hood a competitor or still a potential target for
Speaker 1: some kind of stake. I mean, it's certainly the case
Speaker 1: that they're a competitor. I mean, they've been a competitor
Speaker 1: for a while when they started out in the stock
Speaker 1: trading business and then they added crypto the odd of
Speaker 1: the ability to trade bitcoin neither on their platform. They've
Speaker 1: since been adding more and more assets. I think just
Speaker 1: today they added Avalanche, and so they have realized that
Speaker 1: their customer demand for retail crypto trading is incredible, and
Speaker 1: so they've been a competitor ross for quite some time.
Speaker 1: What we've realized is that we can do a great
Speaker 1: job providing a stock trading platform to our users as well.
Speaker 1: We can do so without relying on payment for order flow.
Speaker 1: We can get people more advanced analytics and tools to
Speaker 1: be able to make smarter investment decisions. We want to
Speaker 1: make our platform more one that is involved with educating
Speaker 1: our users and how to make um you know, how
Speaker 1: to do trades in a responsible way as opposed to
Speaker 1: being more kind of gamified. And so in that sense,
Speaker 1: we think that we have a good shot at competing
Speaker 1: with them on this platform, and we're pretty excited about
Speaker 1: all of the initial user growth that we've seen in
Speaker 1: trading stocks in f t x US. You've also, you know,
Speaker 1: made a number of different sports partnerships your name is
Speaker 1: on some arenas now partnership with Major League Baseball. How
Speaker 1: much are these sports partnership sponsorships actually paying off. Yeah,
Speaker 1: it's hard to put a quantification on that number of
Speaker 1: exactly how much it's paid off. We think that from
Speaker 1: a qualitative perspective, it's been tremendously important for our brand.
Speaker 1: Think about that one year ago, almost no one in
Speaker 1: the US had heard of f t x U S.
Speaker 1: We were going up against you know, uh coin based
Speaker 1: and Cracking and Gemini and different companies that have been
Speaker 1: around for a day gade, and in an industry that
Speaker 1: requires the trusts in your brands that cryptocurrency does. With
Speaker 1: all the noise out there, with exchanges going down, with hacks,
Speaker 1: with the scams, you have to establish that brand presence,
Speaker 1: especially in the United States, and for us, doing things
Speaker 1: like partnering with the major Major League Baseball or you know,
Speaker 1: putting our name in the text arena basically catapulted us
Speaker 1: into the public consciousness in a way that you know,
Speaker 1: going to more traditional advertising routes such as Google ads
Speaker 1: or Facebook ads wouldn't have been able to achieve in
Speaker 1: such a short period of time. All Right, Brett Harrison
Speaker 1: president of f t x U S always going to
Speaker 1: have you, Brett. Thank you for Stoff and my hook.
Speaker 1: As families ease into the back to school season throughout
Speaker 1: the country, let's take a look at trends in the
Speaker 1: world of education technology. Dual Lingo, for one b analyst
Speaker 1: estimates during its second quarter earnings report last week even
Speaker 1: boosted its revenue guidance for the year. I want to
Speaker 1: talk about this and more with Dual Lingo C and
Speaker 1: co founder Louise foun On. So going into a new
Speaker 1: school year, Louise, is the pandemic boom has that been
Speaker 1: keeping up or is it starting to wane? Well, you know,
Speaker 1: the pandemic. The pandemic was interesting for us. It wasn't
Speaker 1: a crazy boom. I mean, we we did benefit a
Speaker 1: little bit from the pandemic, but we have been growing
Speaker 1: steadily since before the pandemic. And you know a lot
Speaker 1: of people have asked us if if afterwards our users
Speaker 1: went down or anything, but we didn't see any of that,
Speaker 1: And I think it's just because we you know, we
Speaker 1: we have used this in every single country in the world,
Speaker 1: and you know, in every associomic, the whole part of
Speaker 1: the economic spectrum so what are the most interesting themes
Speaker 1: going into this particular year. Now that schools generally have
Speaker 1: been basically open for about a year since COVID. I
Speaker 1: think one of the things that it's interesting is that
Speaker 1: we schools in general have just adopted educational technology a
Speaker 1: lot more, and we're going to continue seeing that. So
Speaker 1: we're we're expecting a big back to school bump. We
Speaker 1: usually get it around this year. You know, dual linguists.
Speaker 1: It is used by about half of all schools in
Speaker 1: the United States for teaching fore languages, and so we're
Speaker 1: very excited about that. I think. I think generally educational
Speaker 1: technology is just scariest thing. You've actually been leaning into
Speaker 1: TikTok when it comes to add spend. Talk to us
Speaker 1: a little bit about that and why, well, it's actually
Speaker 1: not at spend. We we have been leading into TikTok.
Speaker 1: But but it's all organic. I mean, really, the spend
Speaker 1: that we have on our TikTok is really the salary
Speaker 1: of of uh, you know, our our employees who who
Speaker 1: run the account. We're blessed that we have a very
Speaker 1: lovable mascot dual ing with the dual the owl, and
Speaker 1: we make all these videos that that go viral. Um,
Speaker 1: some of them have them, you know, are massbot dancing, etcetera.
Speaker 1: So that's what felt really well for us. UM. You know,
Speaker 1: it's approximately it's about ten percent of our users in
Speaker 1: the US new users in the US come from from TikTok,
Speaker 1: and it's it's been very efficient. I mean, again, the
Speaker 1: main spend there is just the salary of a couple
Speaker 1: of people that run it. Interesting because we were talking
Speaker 1: about TikTok versus Facebook and Instagram earlier, and I'm curious
Speaker 1: how you would assess the impact and power of both.
Speaker 1: I mean, do you see TikTok as more powerful or
Speaker 1: potentially a lot more powerful than the other two platforms. Well,
Speaker 1: for us, TikTok has just been significantly more powerful. Um.
Speaker 1: I mean I think I think some of it I
Speaker 1: just has to do with the fact that that it's
Speaker 1: on these days. It's kind of the cool thing. But
Speaker 1: it's also you know, the algorithm really rewards content that
Speaker 1: is that is enjoyable, and I think we've managed to
Speaker 1: create very enjoyable kind of viral content that has worked
Speaker 1: out very very well for us. To a Longo is
Speaker 1: back in China's app stores after a one year hiatus
Speaker 1: talked to us about the impact of the crackdown and
Speaker 1: and how much did that set you back? Yeah, well, China.
Speaker 1: China is a very interesting market for wellfore generally for
Speaker 1: for everything, but for language learning. Is the largest language
Speaker 1: learning market in the world. But for US, the Chinese
Speaker 1: market has always been relatively small. It's only about one
Speaker 1: percent of our our revenue and also of our daily
Speaker 1: active users. About about nine months ago, so UM, we
Speaker 1: got taken down from the app stores, which what it
Speaker 1: meant is are all the users that already had to
Speaker 1: do a lingual could continue using us, but new users
Speaker 1: could not get in there. UM. And and you know,
Speaker 1: about a month ago or so we were reinstated UH
Speaker 1: and we started growing again. Um. And at this point
Speaker 1: we're back to the traffic levels that we had before
Speaker 1: we we got taken down. But for us, even though
Speaker 1: it's it's it's a very interesting market. We also know
Speaker 1: that Western companies UH usually don't do super well in China.
Speaker 1: So um, you know, it's an interesting market, but but
Speaker 1: it's only about one percent of our of our revenues. Now,
Speaker 1: you know, we're no question we're facing a difficult macro
Speaker 1: environment inflation. You know the R word we're hearing over
Speaker 1: and over again. Sometimes it's you know, more impending than
Speaker 1: than than not. Um, how are you expecting that to
Speaker 1: impact your business and the at tech market in general?
Speaker 1: Is this a discretionary market where you know, if companies
Speaker 1: or customers are gonna have to choose, they'll spend less year. Um, well,
Speaker 1: we haven't seen any kind of weakness in our numbers.
Speaker 1: I mean we you know we we we beat our
Speaker 1: our estimates, We increased our guidance for the quarter, and
Speaker 1: I think some of it it just has to do
Speaker 1: with the fact that we're still pretty early in our journey.
Speaker 1: Language learning is a is a very large market. It's
Speaker 1: about sixty billion dollars a year, but most of it
Speaker 1: is still offline. So if you think about language and
Speaker 1: the language learning market, most of it is kind of
Speaker 1: people learning English in night school in Brazil or something
Speaker 1: like that, and and it's shifting online like you know,
Speaker 1: the way dating shifted online over the last twenty years.
Speaker 1: Language learning is still kind of shifting online. So we're
Speaker 1: still in the in the early parts of our growth
Speaker 1: in terms of user growth and also in terms of
Speaker 1: revenue growth. So so we just haven't seen any weakness
Speaker 1: in our numbers. Um. You know the other thing about
Speaker 1: is we have a freemium model where uh, you know,
Speaker 1: people can learn as much as they want on dueling
Speaker 1: entirely for free and then they can they can actually
Speaker 1: turn turn off the ads if you know they pay.
Speaker 1: So so far we just you know, this just hasn't
Speaker 1: affected us at all. Interesting, all right, Weles found On
Speaker 1: CEEO and co founder of Dual Lingo. Thank you so
Speaker 1: much for joining us and giving a snapchat of what's
Speaker 1: going on in your industry. That does it for this
Speaker 1: edition of Bloomberg Technology. Later this week Tuesday, we've got
Speaker 1: Lemonade CEO Daniel Schreiber with us to talk about their results,
Speaker 1: plus how inflation is weighing on consumers. And don't forget
Speaker 1: to check out our podcast wherever you get your podcasts.
Speaker 1: I'm Emily Chang in San Francisco.