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Speaker 1: Good morning. It's Friday, the twenty sixth of January here

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Speaker 1: in London. This is the Bloomberg Dbak you at podcast.

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Speaker 1: I'm Caroline Hepca.

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Speaker 2: And I'm Stephen Carroll. Coming up today. Apple is forced

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Speaker 2: to overhaul its app store and iPhone features to appease

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Speaker 2: the European Union, the.

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Speaker 1: US widens its lead over China as the world's biggest economy.

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Speaker 2: And tracking a boycott movement. We have a special report

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Speaker 2: on the major brands being affected by the ongoing war

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Speaker 2: between Israel and Hamas.

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Speaker 1: Let's start with a roundup of our top stories.

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Speaker 2: Apple has announced a major overhaul of its mobile operating system,

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Speaker 2: web browser, and app store offerings in the European Union

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Speaker 2: beginning in March. As part of the new approach, the

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Speaker 2: firm is ditching commission rates of up to thirty percent

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Speaker 2: for app developers and subscriptions, with most set to pay

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Speaker 2: ten percent after their first year. The changes are only

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Speaker 2: in the EU, but the shift could hurt Apple's services revenue,

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Speaker 2: a growth area for the company that accounts for twenty

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Speaker 2: percent of sales now. Bloomberg's Charlie Palett has more.

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Speaker 3: Apple says the revamp will allow customers to download software

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Speaker 3: from outside the app store for the first time. They'll

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Speaker 3: also be able to use alternative payment systems and more

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Speaker 3: easily choose a new default web browser, addressing two frequent

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Speaker 3: complaints of developers and lawmakers. The sweeping changes will come

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Speaker 3: in March and are a direct response to the EU's

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Speaker 3: new Digital Markets Act, which imposes rigid restrictions on the

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Speaker 3: largest tech firms and boosts the EU Commission's powers as

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Speaker 3: the region's antitrust enforcer. In New York, Charlie Palett Bloomberg Radio, the.

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Speaker 1: United States has pulled further ahead of China as the

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Speaker 1: world's biggest economy. US GDP rose by six point three

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Speaker 1: percent in nominal terms last year, outpacing China's four point

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Speaker 1: six percent gain. While some of the outperformance reflected America's

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Speaker 1: elevated price increases, it also underscores that the US economy

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Speaker 1: is emerging from the pandemic in a better place than China's.

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Speaker 1: Bloomberg's market stretches. Mark Cranfield says Base Jing needs to

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Speaker 1: take action sooner rather than later if it wants to

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Speaker 1: regain market confidence.

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Speaker 4: You hear positive sound bites coming out, whether it's some

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Speaker 4: Chinese authorities or from regulators, and yet the delivery is

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Speaker 4: very slow, and they really need to get on with it,

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Speaker 4: this rescue package that has been hinted at earlier this week.

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Speaker 4: If they don't come up with it quickly, investors again

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Speaker 4: or lose faith. They'll think that there's really no meat

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Speaker 4: to this at all, and they will just go back

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Speaker 4: to looking at the fundamentals. That the big picture of

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Speaker 4: fundamentals on the Chinese economy are not that great, and

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Speaker 4: when you see better opportunities elsewhere, of course the money

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Speaker 4: will stay away.

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Speaker 1: As Mark Cranfield hinted out there, the US economic outperformance

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Speaker 1: is reflected in the country stock market. US shares have

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Speaker 1: hit all time highs this week, whilst Chinese equities are

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Speaker 1: mired in a six trillion dollar plus bear market route.

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Speaker 2: Shares an Intel tumbled more than ten percent yesterday after

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Speaker 2: a bleak forecast. The technology company's sales and profit projection

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Speaker 2: for the first three months of the year came in

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Speaker 2: well below analyst expectations. Intel's outlook suggests there's still a

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Speaker 2: way to go and restoring the corporation's once dominant data

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Speaker 2: center business, while the firm's personal computer business is recovering

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Speaker 2: weakening demand for data center chips and components for self

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Speaker 2: driving cars that have hampered progress.

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Speaker 1: LVMH is proving resilient despite a luxury slow down. Sales

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Speaker 1: that the French conglomerate rose at the end of last year,

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Speaker 1: boosting revenue by nine percent. The group's CFO said that

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Speaker 1: business is now normalizing after a pandemic boom, adding that

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Speaker 1: the company is leaving the COVID period with favorable growth.

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Speaker 1: Chairman and CEO Bernard Arnau announced that his sons Alexander

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Speaker 1: and Frederick will join two of his other children on

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Speaker 1: LVMH's board.

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Speaker 2: The European Center Bank kept borrowing costs on hold, as expected,

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Speaker 2: but markets read President Christine Lagaud's muted affirmation of a

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Speaker 2: summer rate cut as a sign earlier moves are very

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Speaker 2: much in play. Here is the ECB president answering Bloomberg's

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Speaker 2: question about the rate path at the press conference.

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Speaker 5: The consensus around the table of the Governing Council was

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Speaker 5: that it was premature to discuss rate cuts, and in

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Speaker 5: addition to that, I typically stand by my comments, So

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Speaker 5: the comments I made to your television channel, Bloomberg, I

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Speaker 5: certainly stand by them in.

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Speaker 2: That Bloomberg interview last week. Legard also said that traders

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Speaker 2: were hindering the fight against inflation with excessive bets on

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Speaker 2: rate cuts. Traders now expect a ninety percent chance of

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Speaker 2: a reduction in April and over one hundred and forty

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Speaker 2: basis points of easing across the whole of this year.

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Speaker 1: The UK has paused trade deal talks with Canada. Britain

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Speaker 1: is Canada's third largest single country trading partner, with a

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Speaker 1: relationship worth more than twenty five billion dollars. Bluemberg's James

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Speaker 1: Wilcock has the story.

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Speaker 6: It all started so well, I think to an FDA

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Speaker 6: that we're going to work.

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Speaker 7: In the course of the next I guess I mean

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Speaker 7: British consumers will greater quantities of maplestrup and and goodness.

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Speaker 6: Boris Johnson there on a lockdown zoom call back in

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Speaker 6: twenty twenty, signing a deal to cement trade with Kada

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Speaker 6: for three years while they negotiate a free trade deal.

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Speaker 6: The three years are up the pair are now back

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Speaker 6: to trading with tariffs. That laugh you heard was Kada's

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Speaker 6: trade minster Mary Ing. She told reporters this morning. She

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Speaker 6: was disappointed. It's the latest in a string of stall

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Speaker 6: negotiations to Britain after talked up deals with India and

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Speaker 6: the US have failed to materialize. In London, James Walcock

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Speaker 6: Bluemberg Radio.

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Speaker 2: Bank of America is splitting a pool of some eight

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Speaker 2: hundred million dollars in stock rewards with about ninety seven

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Speaker 2: percent of its global workforce eligible. According to an internal

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Speaker 2: memo from CEO Brian moynihan, the incentive will go to

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Speaker 2: workers who are earning as much as half a million

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Speaker 2: dollars a year, and top of it's on top of

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Speaker 2: regular compensation in order to retain employees. The move comes

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Speaker 2: as well as sweet firms are trying to hold on

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Speaker 2: to their best talent while keeping a lid on costs

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Speaker 2: that already forced them to trim staff or freeze hiring. Now,

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Speaker 2: in a moment, we'll get more on the changes that

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Speaker 2: Apple's making to its app store and operating system and

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Speaker 2: bring you our reporting on how boycott movements link to

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Speaker 2: the Israel Hamas war are affecting businesses in the Middle East.

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Speaker 2: But first, another story that cast right this morning about

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Speaker 2: some top changes at JP Morgan.

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Speaker 1: Yeah, so this is JP Morgan chase shuffling its top people,

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Speaker 1: perhaps laying the groundwork for a Diamond succession, of course,

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Speaker 1: so interesting the names Jen Pipsak and Troy Ruboch will

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Speaker 1: lead an expanded commercial and investment back. There's another woman though,

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Speaker 1: who's going to be in sole charge with the consumer

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Speaker 1: and community back. That's Marianne Lake. Daniel Pinto, of course,

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Speaker 1: who spoke to Bloomberg really recently, the sole head of

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Speaker 1: corporate investing investment banking since twenty fourteen. He's going to

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Speaker 1: get a bigger, sort of broader role as president. So

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Speaker 1: you can see that JP Morgan Chase perhaps trying to

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Speaker 1: give those individual was more experience Diamond sixty seventies about

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Speaker 1: halfway through that extra extra extra five years that he's

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Speaker 1: given to.

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Speaker 2: Five more years, as it always says every time someone

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Speaker 2: asks about what if I do next? But look, it's

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Speaker 2: interesting because of course anyone who does take over from

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Speaker 2: eventually is going to have very big shoes to fill

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Speaker 2: in that bank. So this moving around of some of

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Speaker 2: his top lieutenants, as it's being referred to in our reporting,

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Speaker 2: is an interesting move to watch this morning.

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Speaker 1: Now, Apple customers in Europe will be able to download

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Speaker 1: software from outside the app store for the first time

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Speaker 1: from March, as the company tries to plicate European Union

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Speaker 1: regulators and the new EU Digital Markets Act. Joining us

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Speaker 1: now is Bloomberg's chief correspondent, Mark German, up late in

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Speaker 1: Los Angeles to speak to us here on Bloomberg Radio. Mark,

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Speaker 1: thanks so much for your time.

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Speaker 8: It's my absolute pleasure to join and talk about the

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Speaker 8: digital marketer in the EU in these big iPhone changes,

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Speaker 8: So thank you for having me.

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Speaker 9: Yeah.

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Speaker 1: Absolutely, what are the changes exactly? It's quite complicated in

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Speaker 1: terms of the detail.

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Speaker 8: So I would say these changes are historic. For the

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Speaker 8: first time, Apple is going to allow users and again

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Speaker 8: this is EU specific, to install third party app stores.

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Speaker 8: So you'll be able to install maybe an app store

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Speaker 8: from Epic Games, maybe for Microsoft met maybe for Meta,

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Speaker 8: replace the app store from Apple on the phone and

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Speaker 8: install applications via those third party programs. So that's the

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Speaker 8: biggest change. Other changes here are third party tap to

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Speaker 8: pay apps. As you probably know, on the iPhone, the

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Speaker 8: only way that you tap to pay is via the

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Speaker 8: Apple Wallet app and Apple Pay. Now you'll be able

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Speaker 8: to see third parties, perhaps like PayPal or GP Morgan

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Speaker 8: create competitors to that. There will be new all in

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Speaker 8: one streaming services for gaming, and the ability to replace

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Speaker 8: more of your default apps on the iPhone. So these

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Speaker 8: are some pretty big and extremely positive I think changes

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Speaker 8: for consumers and developers.

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Speaker 2: Positive for consumers and developers. What does it mean for Apple?

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Speaker 8: It means a lot for Apple. So I'm still trying

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Speaker 8: to figure out if this is going to hurt Apple

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Speaker 8: from a revenue standpoint or benefit Apple. Some of the

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Speaker 8: new fees that they're putting in place here, charging half

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Speaker 8: a euro to developers per installation, over a million installations

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Speaker 8: in a twelve month period, that can add up very

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Speaker 8: quickly and make Apple a lot of money. So I

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Speaker 8: certainly think that they're trying to protect the revenue here

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Speaker 8: with some of these changes. I think for Apple, though

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Speaker 8: it's basically a net neutral, they're making positive changes for consumers.

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Speaker 8: Still they're fighting them in court. I think they'll probably

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Speaker 8: be pretty even on the money standpoint.

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Speaker 1: Well, that's really interesting in terms of it. Also the

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Speaker 1: EU perspective. Everybody's coming out with their view, aren't they's

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Speaker 1: a big test of EU powers?

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Speaker 8: You say, well, I'll tell you this. For EU power,

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Speaker 8: they got the biggest, most powerful and arguably arrogant company

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Speaker 8: in the world to make massive changes to their crown jewel.

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Speaker 8: So I'd say this is a case study for the

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Speaker 8: amount of power that the EU has, and I don't

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Speaker 8: think I've seen a government be able to enact changes

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Speaker 8: like this in any other major technology company to the

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Speaker 8: scale before. You're talking hundreds of millions of users that

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Speaker 8: are going to be impacted here across countries in the EU,

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Speaker 8: from France to Germany to Belgium, etc.

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Speaker 2: This news coming as somewhat of a surprise to investors.

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Speaker 2: You've been reporting on some of Apple's other recent struggles,

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Speaker 2: from things like supply chains, the self driving car changes,

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Speaker 2: the Apple Watch feature that's been the subject of another

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Speaker 2: antitrust case as well. This is, I suppose, an indication

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Speaker 2: of how difficult it is for Apple to hold on

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Speaker 2: to that top position that it holds in these sectors.

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Speaker 8: Yeah, Apple is taking it from a few angles right now.

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Speaker 8: I think the other significant thing going on from litigation

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Speaker 8: and anti trust standpoint is certainly the Apple Watch missing

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Speaker 8: the blood oxygen feature now in the United States, So

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Speaker 8: the EU has a lot of power, but clearly the

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Speaker 8: US and the International Trade Commission has a lot of

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Speaker 8: power too. This is a US thing only, so maybe

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Speaker 8: listeners in Europe are not as familiar. But for instance,

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Speaker 8: the Apple Watch series six and later, it has this application.

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Speaker 8: You click the button. In fifteen seconds, it'll tell you

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Speaker 8: your blood oxygen saturation. That's the number that most doctors

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Speaker 8: think users should come in between ninety five percent and

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Speaker 8: one hundred percent, depending on their age, condition, altitude, et cetera.

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Speaker 8: And it's a feature that powers parts of sleep tracking

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Speaker 8: and other health applications. And now because of patent litigation,

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Speaker 8: it's not allowed in the US. So if you've bought

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Speaker 8: a new Apple Watch in the last week or so

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Speaker 8: in the US, it's not going to include that feature.

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Speaker 8: So that was a pretty dramatic turn of events for

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Speaker 8: Apple on a really important product.

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Speaker 1: Actually absolutely sort of part of some of the struggles

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Speaker 1: that Apple's face. Mark, thank you so much for being

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Speaker 1: with us and for explaining what Apple customers and the

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Speaker 1: changes in Europe are going to mean. That is Bloomberg's

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Speaker 1: chief technology correspondent, Chief correspondent Mark German up late force

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Speaker 1: in La.

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Speaker 2: We'll do a story from the Middle East next and

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Speaker 2: some of the consequences of the Israel Hamas war on

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Speaker 2: the business world shoppers in parts of the Middle Easter

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Speaker 2: are shunning foreign brands amid anger over US and European

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Speaker 2: government policies supporting Israel. Bloomberg has been tracking the extent

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Speaker 2: and effect of these changing consumer habits across the region.

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Speaker 2: Are reporters Salma Elwardani in Cairo and len Al Rashdan

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Speaker 2: in Dubai have been telling us about what they found out.

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Speaker 10: The key movement to be aware of here is the

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Speaker 10: Palaestinian led boycott, divestment sanctions. It's an almost two decade

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Speaker 10: old movement that protests international support for Israel's actions in

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Speaker 10: Palastinian territories and advocates applying pressure on Israel to comply

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Speaker 10: with international law through targeting certain business and institutions accused

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Speaker 10: of supporting Israel. So we've been seeing this ever since

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Speaker 10: October seven. The companies that have been hit the most.

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Speaker 10: One of them is McDonald's. Calls to boycott McDonald's happened

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Speaker 10: after images circulated of McDonald's branches in Israel handing meals

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Speaker 10: to Israeli soldiers. Starbucks entered a lawsuit against the Starbucks

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Speaker 10: Workers United after they made a statement in solidarity with Palestine.

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Speaker 10: We have Coca Cola and Pepsi. They both have some

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Speaker 10: involvement with manufacturing in Israel. So really, these companies that

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Speaker 10: are being accused of supporting violations against Palestinian rights, they're

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Speaker 10: being hit.

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Speaker 2: Yeah, And of course these companies have responded to some

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Speaker 2: of these claims, talking about disinformation and inaccurate reports regarding

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Speaker 2: their position. In the case of McDonald's, for example, they're

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Speaker 2: saying that the corporation is not funding or supporting any

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Speaker 2: governments involved in the conflicts. Starbucks also issuing a statement

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Speaker 2: saying they have no political agenda and they don't use

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Speaker 2: their profits to fund any government amilitary operations anywhere. So

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Speaker 2: the companies have been responding to this, But what do

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Speaker 2: we know about how businesses are being affected by these

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Speaker 2: boycott calls?

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Speaker 10: So from eyewitnesses and our reporters across several Middle Eastern countries,

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Speaker 10: we're seeing branches all over, these fast food chains and

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Speaker 10: these cafes being almost empty, deserted. Supermarkets and restaurants are

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Speaker 10: no longer carrying Coca Cola or Pepsi brand, I mean,

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Speaker 10: fuzzy drinks or really any item that falls within that company.

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Speaker 10: And in recent weeks, the McDonald's CEO it warnant that

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Speaker 10: his firm is seeing meaningful business impact. And we've also

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Speaker 10: seen that shares of Americana Restaurants International, the Middle East

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Speaker 10: franchise operator for KFC, Pizza Hut, Krispy Kreme and Hardy's,

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Speaker 10: they've declared significantly since mid October. And a lot of

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Speaker 10: end lists are saying that's that the hitd to profits

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Speaker 10: is from the boycotts.

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Speaker 2: Okay, And of course we'll get more information from these companies.

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Speaker 2: We're expecting it in their next set of earnings results

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Speaker 2: as well. Salma, you've been speaking to some consumers who've

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Speaker 2: changed their spending habits as a result of these campaigns.

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Speaker 2: Let's listen to part of one of your conversations with

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Speaker 2: Sarah L. Masri, who works as a project manager in

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Speaker 2: a cultural organization in Egypt.

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Speaker 11: And al, Look, here's why I think boycotting is important

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Speaker 11: because largely we're helpless. We're their closest neighbor and we

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Speaker 11: are supposed to be doing more, but we can't. We

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Speaker 11: are restricted by decisions governments are take it. So I

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Speaker 11: believe that boycotting is the only weapon of the people.

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Speaker 11: It's the only thing people have control of.

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Speaker 2: Sarah Masri there speaking to Salmama. How widespread our opinions

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Speaker 2: like these in Egypt and across the Middle East.

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Speaker 9: A lot of people like Sarah are turning to local

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Speaker 9: alternatives since the beginning of the war in protest again

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Speaker 9: is Western government support for Israel. You can see the

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Speaker 9: evidence in the streets of Cairo, for example, where the

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Speaker 9: ones very very popular global fast food chains and shops

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Speaker 9: are largely empty. Pro Palestinian sentiment has traditionally been strong

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Speaker 9: in Egypt, Jordan, create and a lot of countries in

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Speaker 9: the Middle East, and since October, boycut calls have circulated

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Speaker 9: on social media, lasting dozens of companies and products, prompting

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Speaker 9: shoppers to shift to local alternatives. I think the point

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Speaker 9: that Sarah is making here is very important and is

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Speaker 9: being shared by a lot of people here is that

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Speaker 9: in this region, where there's a little chance of people

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Speaker 9: to take to street to the streets because of the

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Speaker 9: security restrictions, the boycot can be the best, or even

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Speaker 9: the only way to make their voices heard. And like

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Speaker 9: she said, the only thing that you can't control is

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Speaker 9: where I put my money. Some of the people that

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Speaker 9: interviewed were also saying that joining the boycot made them

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Speaker 9: more conscious of the power as consumers, So the supermarket

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Speaker 9: trips are now less about grabbing the favorite or even

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Speaker 9: the cheapest product. It's more about the values behind it.

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Speaker 9: Consumers are becoming more mindful and conscious of the human

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Speaker 9: costs of the consumption and are demanding greater transparency and

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Speaker 9: are expecting a specific set of standards and ethics from

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Speaker 9: the brands they buy.

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Speaker 2: That's really interesting to put it in that context for us.

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Speaker 2: Another parts of this story are the companies who've been

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Speaker 2: benefiting from the boycotts of other brands. You've been speaking

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Speaker 2: to some of them, including a soda maker in Egypt

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Speaker 2: that's seen a big boost in their sales. What have

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Speaker 2: they told you, Yes, definitely.

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Speaker 9: The past three months have witnessed the rise of local brands.

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Speaker 9: Social media users and influences have been using the platforms

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Speaker 9: to advocate and re view local products instead of Western ones,

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Speaker 9: including food, clothes, skincare. One of the companies is Pierce Pattests.

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Speaker 9: It's an old Egyptian company that used to have popularity

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Speaker 9: one hundred years ago and used to take pride as

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Speaker 9: the first maid and egypt soda, but then was overtaken

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Speaker 9: by the rise of low Western brands. Over the decades.

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Speaker 9: Now it's the opposite. Since October, people took to social

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Speaker 9: media to promote for it and look for it.

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Speaker 11: Everywhere they were.

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Speaker 9: The company was bombarded with calls from customers making orders.

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Speaker 9: And that's because consumers are going to restaurants and supermarkets

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Speaker 9: asking for Spiro or any other local sold maker. And

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Speaker 9: the company was saying that their sales have more than

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Speaker 9: triple because of that. And there's so many stories like

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Speaker 9: that of Spars Pats.

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Speaker 2: So that was Bloomberg's Salma Elwardani reporting from Cairo and

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Speaker 2: before he heard Lenel Rashdan discussing their reporting on the

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Speaker 2: boycott movements across the Middle East. A couple of interesting

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Speaker 2: points in this this story, by the way, there's plenty

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Speaker 2: more detail art on the terminal and on bloomberg dot

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Speaker 2: Com if you want to read it as well. Is

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Speaker 2: this idea of the places that and this does meaning

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Speaker 2: that both of the reporters that I spoke to and

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Speaker 2: our other colleagues across the region have talked about as well.

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Speaker 2: It's the places that are empty that you would normally

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Speaker 2: see these these big particularly American brands, the likes of

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Speaker 2: Starbucks or KFC. As we heard there those those outlets

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Speaker 2: are much quieter and have been much quieter, and that's

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Speaker 2: been one of the ways. And I think that speaks

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Speaker 2: to the point that Salma made, as you know, whereas

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Speaker 2: people feel very limited in their ability to protest in

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Speaker 2: some of these countries, this is a way that people

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Speaker 2: are able to express their opinions, you know, without necessarily

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Speaker 2: putting themselves as risk.

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Speaker 1: Yeah. I think to my mind, in terms of investors,

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Speaker 1: this speaks to the complexity the difficulties of investing in ESG.

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Speaker 1: You know, environmental social governmance. You know that there are

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Speaker 1: different parameters in different parts of the world about what

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Speaker 1: that might mean. And for example, looking at the data

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Speaker 1: only today on the Ternel, there's a piece about how

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Speaker 1: actually ESG funds have seen a big net global outflow.

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Speaker 1: There's been a sort of turning away, certainly in the

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Speaker 1: US a little bit in the last three months. US

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Speaker 1: investors have turned away from that. So, I mean, overall

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Speaker 1: ESG funds have gone up in the last year, but

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Speaker 1: I think that's sort of one of the issues, you know,

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Speaker 1: when you're thinking about investing.

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Speaker 2: Yeah, and look, this is something that we will be

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Speaker 2: looking out for details of in the reports from some

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Speaker 2: of these big consumer facing companies that operate in the

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Speaker 2: Middle East as well, because what we have at the

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Speaker 2: moment is tracked via moves on the stock market and

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Speaker 2: individual stories that we've heard from franchise holders and others

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Speaker 2: in the region as well, so will be interested to

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Speaker 2: follow how exactly this will play out in those global

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Speaker 2: earnings will get from those companies in the coming weeks

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Speaker 2: as well. This is Bloomberg Daybreak Europe, your morning brief

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Speaker 2: on the stories making news from London to Wall Street

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Speaker 2: and beyond.

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