WEBVTT - Twitter Whistle-Blower Testifies and Market Selloff 0:00:02.240 --> 0:00:05.640 From the heart of where innovation, money and power collide 0:00:06.360 --> 0:00:10.880 in Silicon Valley and beyond. This is Bloomberg Technology with 0:00:10.920 --> 0:00:27.600 Emily jay I rememberly checking San Francisco and this is 0:00:27.640 --> 0:00:31.080 Bloomberg Technology. Coming up in the next hour is the 0:00:31.080 --> 0:00:34.040 war stock selloff in two years, a late afternoon drop 0:00:34.440 --> 0:00:38.120 after a surprisingly high inflation report. Tech hit hard. We'll 0:00:38.120 --> 0:00:41.520 tell you how. Plus Twitter shareholders of Proof must forty 0:00:41.560 --> 0:00:44.160 four billion dollar buyout, as the former head of security 0:00:44.200 --> 0:00:48.120 testifies on Capitol Hill saying Twitter's executives are misleading the 0:00:48.159 --> 0:00:51.479 public and security risks are a ticking time bomb. What 0:00:51.560 --> 0:00:54.040 it means for Musk's attempt to get out of the deal, 0:00:54.920 --> 0:00:56.960 and my one on one with Melinda French Gates on 0:00:56.960 --> 0:01:00.120 a new report from the Gates Foundation that shows the 0:01:00.120 --> 0:01:02.280 Wall isn't doing so great. We also talk about the 0:01:02.360 --> 0:01:06.880 changing philanthropic landscape, how she's taking action post route, and 0:01:06.959 --> 0:01:10.360 her relationship with Billy. We're gonna get to all of 0:01:10.360 --> 0:01:12.120 that in a moment before let's stick further into the 0:01:12.120 --> 0:01:14.040 cell off of what it means. Victoria Green is the 0:01:14.080 --> 0:01:18.679 chief investment officer at g Squared Private while she joins us. Now, Victoria, 0:01:18.720 --> 0:01:20.800 what do you make of this, and so suddenly in 0:01:20.840 --> 0:01:25.560 the session. Uh, today was when a reality met expectations 0:01:25.600 --> 0:01:28.200 on inflation, and I think the market had gone into this. 0:01:28.319 --> 0:01:31.200 Maybe the Fed isn't pivoting, but we're definitely a peak inflation, 0:01:31.240 --> 0:01:33.759 and today was a wake up and a cold slap 0:01:33.840 --> 0:01:36.760 that inflation is still here and it's very, very sticky inflation. 0:01:36.800 --> 0:01:39.280 There's no on your just about energy. I think the 0:01:39.360 --> 0:01:43.319 surprise on food and housing, medical expenses, veterinary care, A 0:01:43.360 --> 0:01:46.400 lot of areas that we thought was getting better really 0:01:46.440 --> 0:01:48.400 were it. So I think today was a step back 0:01:48.440 --> 0:01:51.320 into the reality. The number one, the Fed's gonna go 0:01:51.360 --> 0:01:54.800 seventy five bass points, Number two four present terminal rate 0:01:54.880 --> 0:01:57.320 maybe too low. And number three we're still in a 0:01:57.320 --> 0:02:01.200 sticky inflationary environment that may prove the difficult to bring down, 0:02:01.360 --> 0:02:05.320 especially food prices. Right now, what do you make of 0:02:05.360 --> 0:02:08.920 what happened with tech? In particular? What distinguishes the tech 0:02:08.960 --> 0:02:10.760 part of this sell off from the rest of the 0:02:10.800 --> 0:02:13.800 sell off? Sure, so tech stocks tend to be very 0:02:13.800 --> 0:02:18.240 growthy stocks, higher multiples, promising higher than the market growth, right, 0:02:18.280 --> 0:02:20.240 That's why you buy them. They're supposed to grow faster, 0:02:20.360 --> 0:02:23.120 but you're paying more today for a dollar future earnings, 0:02:23.120 --> 0:02:25.519 And every time you see something like this for real 0:02:25.600 --> 0:02:28.440 rates arising, the fattest hiking. It really kind of checks 0:02:28.440 --> 0:02:30.560 of how long the duration stock do you want? You 0:02:30.639 --> 0:02:32.520 kind of want stocks that are awarding you for owning 0:02:32.520 --> 0:02:35.400 them now, and most tech stocks tend to be needing 0:02:35.440 --> 0:02:38.919 growth and promising further future growth. So right now it's 0:02:38.960 --> 0:02:41.640 kind of a show me, like what can what what 0:02:41.760 --> 0:02:44.120 kind of income can you produce for me? How successful 0:02:44.160 --> 0:02:46.360 are you? And you didn't see anybody that was immune 0:02:46.360 --> 0:02:48.560 from me today. It was a total washout on tech 0:02:48.639 --> 0:02:50.960 and and any of them, including the apples and the 0:02:50.960 --> 0:02:52.880 market stofts of the world. But you have to consider 0:02:53.000 --> 0:02:55.519 very blea chip tech stocks did not hold up well, 0:02:55.720 --> 0:02:58.280 and we saw like the semiconductor sector really takes some 0:02:58.360 --> 0:03:00.200 more pain today, and I think a lot of that 0:03:00.360 --> 0:03:03.360 is repressing expectations for global growth. The fact we're going 0:03:03.400 --> 0:03:05.440 to be in a high key inflationary environment and the 0:03:05.480 --> 0:03:08.440 fact that it's a very very very high probability this 0:03:08.520 --> 0:03:11.120 continues to slow down, and that puts pressure. Like we 0:03:11.120 --> 0:03:13.800 saw with the video, if we see PC and gaming slowdown, 0:03:13.919 --> 0:03:16.960 people are not upgrading their computers as frequently that's just 0:03:16.960 --> 0:03:19.920 gonna put pressure on a heating the growth multiples they 0:03:19.960 --> 0:03:21.760 need to go because the worst thing you want to 0:03:21.800 --> 0:03:24.840 do is own a growth stuff that stopped growing, because 0:03:24.880 --> 0:03:28.639 then what do you really own your own add So 0:03:28.760 --> 0:03:30.720 the big question is, of course, are the market is 0:03:30.720 --> 0:03:33.160 going to be back up tomorrow? What do you think? 0:03:33.360 --> 0:03:36.280 Or is this could today be some sort of turning 0:03:36.320 --> 0:03:42.480 point to a further drop, a more prolonged drop in market. Yeah, 0:03:42.560 --> 0:03:45.040 we unfortunately do see this as a bear market rally 0:03:45.120 --> 0:03:46.920 that we're going to retest our lows. You know, we 0:03:46.960 --> 0:03:49.560 did see the supports hold around thirty nine on the 0:03:49.680 --> 0:03:51.640 SFP five hundred, so you do have a little bit 0:03:51.640 --> 0:03:54.080 of a support there. But I think as we digest, 0:03:54.160 --> 0:03:56.160 you really have about a week now between now and 0:03:56.200 --> 0:03:58.240 when the Fed speaks, and I think people are going 0:03:58.280 --> 0:04:00.160 to get very nervous about what the Fed's gonna to do. 0:04:00.280 --> 0:04:02.680 You saw some traders talking about a hundred basis points, 0:04:02.720 --> 0:04:04.640 you know, is it gonna be fifty and fifty to 0:04:04.800 --> 0:04:07.640 end out the year? And this really this reality of 0:04:07.680 --> 0:04:10.320 the tightening cycle. And then step back, not just about 0:04:10.320 --> 0:04:13.200 the United States, but about what other economies around the 0:04:13.240 --> 0:04:15.720 world they're doing, how much they're tightening rates. What that 0:04:15.800 --> 0:04:18.359 may do for adjustable rate mortgages. You know in the 0:04:18.440 --> 0:04:20.919 US we're only about seven percent adjustable right now, but 0:04:21.000 --> 0:04:23.960 now in Australia, the UK, Spain, they're very much higher 0:04:23.960 --> 0:04:26.320 adjustable rate and they're gonna be hit with these industrates. 0:04:26.520 --> 0:04:28.240 So I think it's too early to buy the dip. 0:04:28.480 --> 0:04:30.560 At some point we'll hit oversold again, but I think 0:04:30.560 --> 0:04:33.599 we're gonna retest down to the thirty six hundreds. You 0:04:33.680 --> 0:04:36.559 might get a relief rally, but don't get fomo about 0:04:36.560 --> 0:04:39.000 the market going up. I think you've got more downside pressure. 0:04:40.360 --> 0:04:44.320 So how are you deciding or changing uh potential decisions 0:04:44.320 --> 0:04:46.599 about where you park your money and how much of 0:04:46.600 --> 0:04:49.880 it goes into growthy uh to use your word tech 0:04:50.200 --> 0:04:53.040 and not. I think right now it's more of the 0:04:53.120 --> 0:04:55.320 value play the blue chip pelly. We want stocks that 0:04:55.360 --> 0:04:57.760 have defensible motes, you know, what are their cash flow 0:04:57.800 --> 0:04:59.799 is gonna look like if the world continues to slow. 0:05:00.240 --> 0:05:02.680 The problem with the core inflation rising is it really 0:05:02.680 --> 0:05:05.760 directly pressures the consumers. There's nowhere to hide, doesn't matter 0:05:05.800 --> 0:05:07.960 if you're eating out or at the grocery store. You know, 0:05:07.960 --> 0:05:10.239 when we have some factors that are gonna make food worse. 0:05:10.320 --> 0:05:12.960 You know the Avian flu that has caused the shortage, 0:05:13.000 --> 0:05:15.360 so eggs and chicken are more expensive. I think you 0:05:15.400 --> 0:05:18.120 really want to hide in quality stocks. Also, the land 0:05:18.160 --> 0:05:20.760 of Tina, right, there is no alternative. As these treasury 0:05:20.800 --> 0:05:23.120 yields come up suddenly, you kind of do have an 0:05:23.160 --> 0:05:26.200 alternative to park some in some really short tragury bills. 0:05:26.200 --> 0:05:28.480 Don't wanna take any duration risk. But if you look 0:05:28.520 --> 0:05:31.719 across the landscape, you now jury what bills yielding well 0:05:31.760 --> 0:05:34.560 above the average diving and yield, and we know those 0:05:34.600 --> 0:05:36.800 are gonna keep coming up. So the world of Tina 0:05:36.960 --> 0:05:40.080 is also rotating, and you may see a flight to safety. 0:05:40.080 --> 0:05:42.960 You saw the tear yields hit the highest in fifteen years. 0:05:43.120 --> 0:05:45.120 You're seeing a lot of pressure on the rates market. 0:05:45.279 --> 0:05:47.240 But if you hide at that very short end, you 0:05:47.279 --> 0:05:48.960 may be able to make some money as you wait 0:05:48.960 --> 0:05:52.760 out the worst of this. All right, Victoria Green g 0:05:52.920 --> 0:05:55.719 Squared Private Wealth. Always good to have you, Victoria, Thanks 0:05:55.760 --> 0:05:59.479 for breaking it down. Coming up all you needed out 0:05:59.600 --> 0:06:02.080 about cestimony from the Twitter whistle blower and what it 0:06:02.120 --> 0:06:05.560 means for Elon Musk. That is next. This is Bloomberg 0:06:07.880 --> 0:06:11.159 It took me maybe thirty minutes to reach out to 0:06:11.400 --> 0:06:14.360 an employee and say, what do we know about this person? 0:06:14.880 --> 0:06:16.960 And then it only took that person maybe ten minutes 0:06:17.000 --> 0:06:20.120 to get back to me and said, Okay, here's who 0:06:20.120 --> 0:06:22.640 they are. This is the address where they live, this 0:06:22.680 --> 0:06:24.919 is where they are physically at this moment. They're on 0:06:24.960 --> 0:06:28.040 their phone. We know their phone number. We also know 0:06:28.080 --> 0:06:29.880 all of the other accounts that they've tried to set 0:06:29.960 --> 0:06:32.159 up on the system and hide, and we know who 0:06:32.160 --> 0:06:34.760 they are on the other social media platforms as well. 0:06:45.839 --> 0:06:48.280 It was an edge of your seat kind of testimony 0:06:48.320 --> 0:06:51.720 from former Twitter executive turn whistleblower Peter's at cos at Co, 0:06:51.960 --> 0:06:56.720 slamming Twitter's management, it's operations, and calling its security risks 0:06:56.760 --> 0:07:00.520 a ticking time bomb. Here's some of what told the 0:07:00.520 --> 0:07:08.320 Senate Judiciary Committee Twitter leadership is misleading the public, lawmakers, regulators, 0:07:08.520 --> 0:07:14.040 and even its own board of directors. What I discovered 0:07:14.080 --> 0:07:19.040 when I joined Twitter was that this enormously influential company 0:07:19.360 --> 0:07:23.760 was over a decade behind industry security standards. To put 0:07:23.760 --> 0:07:28.600 it bluntly, Twitter leadership ignored ignored its engineers because key 0:07:28.640 --> 0:07:32.120 parts of leadership lacked the competency to understand the scope 0:07:32.120 --> 0:07:37.400 of the problem. But more importantly, their executive incentives led 0:07:37.440 --> 0:07:40.760 them to prioritize profits over security. They don't know what 0:07:40.880 --> 0:07:45.320 data they have, where it lives, or where it came from, 0:07:45.360 --> 0:07:50.080 and so unsurprisingly they can't protect it. And this leads 0:07:50.120 --> 0:07:53.680 to the second problem, which is the employees then have 0:07:53.880 --> 0:07:56.120 to have too much access to too much data and 0:07:56.160 --> 0:07:59.080 to too many systems. There was not an easy ability 0:07:59.120 --> 0:08:02.440 for me to mind which engineers had logged into which 0:08:02.440 --> 0:08:05.040 systems and what and what data that they had accessed. 0:08:05.200 --> 0:08:08.400 I did explain this to Mr Dorsey. My understanding is 0:08:08.440 --> 0:08:11.240 he did not understand this prior to bringing me in, 0:08:11.280 --> 0:08:13.000 and that was one of the reasons that he was 0:08:13.280 --> 0:08:17.840 understand it. Now. I believe after seeing CEO, does he 0:08:17.920 --> 0:08:21.240 understand this? Um? I believe since he has been there 0:08:21.280 --> 0:08:24.800 for ten years and rose up through the ranks in engineering, 0:08:25.320 --> 0:08:28.240 and he has talked to the engineers and they have 0:08:28.360 --> 0:08:31.880 told that yes. I believe. Yes. I'm reminded of one 0:08:31.920 --> 0:08:35.840 conversation with an executive when I said, I am confident 0:08:35.920 --> 0:08:39.280 that we have a foreign agent, and their response was, well, 0:08:39.320 --> 0:08:41.520 since we already have one, what does it matter if 0:08:41.520 --> 0:08:47.200 we have more? Let's keep growing the office here to 0:08:47.240 --> 0:08:51.240 discuss Adam Kovakovitch, Chamber of Progress founder and CEO, as 0:08:51.280 --> 0:08:54.000 well as Bloomberg's own Alex Borenka, who covered the hearing 0:08:54.040 --> 0:08:57.440 today on our live blog. Adam, I want to start 0:08:57.480 --> 0:09:00.240 with you. What was your initial reaction to Za Those 0:09:00.280 --> 0:09:05.240 testimony seemed like not a good day for Twitter. Yeah, 0:09:05.280 --> 0:09:07.840 he claimed that the company's security was lacking. I think 0:09:07.840 --> 0:09:10.360 the company, we know the company has disputed that in detail, 0:09:10.440 --> 0:09:13.040 and others have pointed out it was his responsibility to 0:09:13.040 --> 0:09:15.959 strengthen and security. This role. This question of whether the 0:09:16.000 --> 0:09:18.960 company's security is sufficient, I think will ultimately be one 0:09:19.280 --> 0:09:22.040 for the Federal Trade Commission to determine. I will say 0:09:22.080 --> 0:09:23.720 that when I worked with in tech companies, you know, 0:09:23.760 --> 0:09:27.160 no company lights have likes having their internal disputes and 0:09:27.240 --> 0:09:30.160 challenges are publicly. That may be especially true here given 0:09:30.160 --> 0:09:33.760 that there were clearly conflicts between Peter's Echo and Paragua Aggerwal, 0:09:33.840 --> 0:09:37.000 But ideally even the dust settles companies can often learn 0:09:37.040 --> 0:09:39.840 from criticism and improve from it. I think with with 0:09:39.920 --> 0:09:43.240 security that it's a hard topic because despite the kind 0:09:43.240 --> 0:09:45.840 of the political table pounding, the reality is nuanced. Twitter 0:09:45.920 --> 0:09:49.160 has had a few high profile hacks, but they're they're 0:09:49.160 --> 0:09:51.400 not a regular occurrence. And I think in the realm 0:09:51.400 --> 0:09:53.319 of security, you know, every day without a hack, of 0:09:53.360 --> 0:09:56.320 which Twitter has had many, is a success. Of course, 0:09:56.320 --> 0:09:58.920 there's no prize for a day without without breaches? Could 0:09:58.960 --> 0:10:02.000 could most companies in including Twitter do more to improve security? 0:10:02.000 --> 0:10:05.520 Almost certainly? Does Twitter do security better than most companies? 0:10:05.679 --> 0:10:12.040 Almost certainly, Alex, what were your big takeaways about, you know, 0:10:12.160 --> 0:10:17.040 sort of the big revelations here, and uh, you know 0:10:17.240 --> 0:10:21.320 what this might actually mean for its dispute with Elon Musk, 0:10:21.559 --> 0:10:25.360 given that it didn't seem like bots and spam, which 0:10:25.400 --> 0:10:30.760 his his his main point of contention really came up. Yeah, 0:10:30.800 --> 0:10:33.760 so I'll start with the takeaways that are not Musk related. 0:10:34.000 --> 0:10:36.640 Related to what Adam was saying. There was allowed a 0:10:36.679 --> 0:10:39.240 lot of political table pounding and a lot of calls 0:10:39.320 --> 0:10:44.320 for increase enforcement, increase regulation, and Emily, there are some 0:10:44.440 --> 0:10:47.559 kind of surprising allies in those calls. You saw folks 0:10:47.600 --> 0:10:51.839 like Lindsay Graham, the Republican from South Carolina, aligning with 0:10:51.880 --> 0:10:55.719 Elizabeth Warren, the Democrat from Massachusetts, saying we're working on 0:10:55.800 --> 0:11:00.440 something to um better regulate tech companies. Your word, Amy 0:11:00.480 --> 0:11:04.439 Klobuchar and Chuck Grassley also lean into this idea, and 0:11:04.520 --> 0:11:07.920 Senator Blumenthal actually suggests that maybe we need a new 0:11:07.920 --> 0:11:11.760 regulatory agency to regulate big tech. All of that is 0:11:11.840 --> 0:11:13.480 very much in the realm of d C, and this 0:11:13.600 --> 0:11:17.600 ongoing conversation of the role of big tech and UH 0:11:17.679 --> 0:11:21.360 where regulation comes in. The Ellen Musk part UM kind 0:11:21.360 --> 0:11:23.200 of plays into a little bit of that. What we 0:11:23.280 --> 0:11:26.319 heard from Zach Coo in terms of UM what he 0:11:26.440 --> 0:11:30.880 described as almost a cultural UM kind of aspect of 0:11:30.880 --> 0:11:34.920 the company, where he said the company kind of fights fires, 0:11:34.960 --> 0:11:38.440 moves from fire to fire. UM was the quote, makes 0:11:38.480 --> 0:11:43.080 short term changes. Isn't thinking long term about security? They're 0:11:43.120 --> 0:11:47.200 only really thinking long term about growing revenue and users. 0:11:47.280 --> 0:11:50.079 So UM, that point right there, Emily, even though it's 0:11:50.120 --> 0:11:53.840 not specifically UM one of the three reasons why Ellen 0:11:53.880 --> 0:11:56.440 has given to back out of the deal UM, I 0:11:56.480 --> 0:11:58.360 think that would be the one that Musk might be 0:11:58.400 --> 0:12:01.240 most interested in. He has kind of leaned on this 0:12:01.320 --> 0:12:05.840 idea that the board, UM and the executives have misrepresented data. 0:12:06.120 --> 0:12:08.520 So while we didn't hear a lot about bots or 0:12:08.600 --> 0:12:12.480 spam accounts, that cultural element might be the one that 0:12:12.559 --> 0:12:15.679 we see pulled into the argument that Musk is poised 0:12:15.679 --> 0:12:19.920 to take into court in October. Interesting, Adam, what do 0:12:19.960 --> 0:12:23.239 you make of that? Are Bloomberg Intelligence analysts have concluded 0:12:23.720 --> 0:12:27.760 they don't think this testimony will have a material adverse 0:12:27.920 --> 0:12:32.360 impact on Twitter's attempt to hold Musk to this deal. 0:12:32.480 --> 0:12:36.640 They still think there's a seventy seven zero percent chance 0:12:37.160 --> 0:12:40.559 this deal goes through. Um, you know, what do you 0:12:40.600 --> 0:12:44.760 think about what zach Co said that could potentially rise 0:12:44.840 --> 0:12:48.160 to the level of impacting whether or not this still 0:12:48.200 --> 0:12:51.720 happens at all. Well, I'm not a stock analyst, I 0:12:51.760 --> 0:12:53.840 do agree. One of the things that was surprising to 0:12:53.920 --> 0:12:56.200 me was the extent to which the bots question really 0:12:56.200 --> 0:12:58.160 didn't come up today. And that was surprising to me 0:12:58.240 --> 0:13:00.920 because in the past of the things we have seen 0:13:00.960 --> 0:13:04.600 a lot of is particularly Republicans in Congress, fairly eager 0:13:04.720 --> 0:13:07.840 to uh talk about Twitter in a way that you know, 0:13:07.960 --> 0:13:10.880 is very much in line with Musk's goals, And so 0:13:10.920 --> 0:13:13.080 that was a bit of a surprise for me. But 0:13:13.200 --> 0:13:15.680 I don't think that I you know, I think that 0:13:15.679 --> 0:13:17.760 that is really a separate process, right And what was 0:13:17.840 --> 0:13:19.840 unique to me about this was interesting because I compared 0:13:19.880 --> 0:13:23.080 this a lot to the Francis Howgan testimony last year 0:13:23.080 --> 0:13:27.360 around Facebook, which I think led policymakers to introduce a 0:13:27.440 --> 0:13:30.080 number of bills. There were eight different bills introduced last 0:13:30.120 --> 0:13:32.240 year as a result of the Howgan testimony, mostly dealing 0:13:32.240 --> 0:13:35.600 with social media. But today's testimony was really uniquely about 0:13:35.640 --> 0:13:38.959 Twitter and its security practices. I think that question is 0:13:39.000 --> 0:13:40.680 most likely to be looked at in great to tail 0:13:40.679 --> 0:13:42.760 by the Federal Trade Commission. And then the question of 0:13:42.800 --> 0:13:46.040 bots really, which didn't come up today, is, as we know, 0:13:46.400 --> 0:13:49.880 a central question of the litigation that that the companies 0:13:49.880 --> 0:13:52.640 engaged with musque. So I don't think that there wasn't 0:13:52.640 --> 0:13:54.640 anything necessarily new today that came out of the hearing 0:13:54.800 --> 0:13:58.760 that I think changes the direction of the litigation. Well, 0:13:58.760 --> 0:14:02.280 and comparing it to Frances how testimony, UM, you know 0:14:02.840 --> 0:14:07.160 that was really impactful, seemed to have a significantly adverse 0:14:07.200 --> 0:14:11.640 effect on h Facebook, which you know has since changed 0:14:11.679 --> 0:14:16.360 its name, has been you know, still working on um 0:14:16.360 --> 0:14:19.080 trying to clean up its reputation in part in response 0:14:19.120 --> 0:14:21.760 to that and of course other things. Um, you know, 0:14:22.200 --> 0:14:24.800 one more question about the Elon Musk part of this 0:14:25.040 --> 0:14:29.640 um Alex Twitter has responded saying that they stand ready 0:14:29.640 --> 0:14:33.760 and willing to complete the merger with Elon Musk. They say, 0:14:33.800 --> 0:14:38.960 point six percent of shareholders today approved Elon Musk doing 0:14:39.080 --> 0:14:44.160 this deal. That was expected. But you know, Twitter still, 0:14:44.640 --> 0:14:48.520 Twitter still saying we're gonna make this happen whether you 0:14:48.560 --> 0:14:54.160 like it or not. Yeah, it's a it's a funny situation, Emily, right, Um, 0:14:54.160 --> 0:14:57.160 where the owner could be a man who has now 0:14:57.800 --> 0:15:00.520 had three ticks in the IDOL want to do this 0:15:00.600 --> 0:15:04.120 deal bucket. Um. I think that that shareholder approval that 0:15:04.160 --> 0:15:07.240 you saw today is significant. Um. It was expected, but 0:15:07.280 --> 0:15:10.800 it is significant. UM that at least that very large 0:15:10.880 --> 0:15:14.040 majority thinks that this is the best kind of path 0:15:14.080 --> 0:15:18.000 forward for shareholder value for this company. Um. But certainly, 0:15:18.040 --> 0:15:21.200 Emily will we'll be following the play by play going 0:15:21.320 --> 0:15:24.200 into October. We've already seen a little bit of drama. 0:15:24.240 --> 0:15:26.720 The judge coming to Mosque seeing you need to give 0:15:26.800 --> 0:15:29.640 up your text messages. Uh, the judge going to Twitter 0:15:29.720 --> 0:15:32.840 saying you need to reveal more data. So they're certainly 0:15:32.880 --> 0:15:36.320 going to be UM more fencing back and forth as 0:15:36.360 --> 0:15:38.800 we go into the next couple of months here. Um, 0:15:38.840 --> 0:15:42.560 but this at least is kind of another checkbox for 0:15:42.600 --> 0:15:45.880 this deal to continue. To that litigious end that we're 0:15:45.880 --> 0:15:49.240 set on right now. Now, Adam, one of the interesting 0:15:49.280 --> 0:15:51.520 things that Zacho said is that Twitter is more concerned 0:15:51.560 --> 0:15:56.360 about foreign regulators than US regulators. What did you make 0:15:56.400 --> 0:15:59.880 of that? And and and if it'll goed, uh, potentially 0:15:59.880 --> 0:16:06.240 the FTC into taking more aggressive action or other regulators. Yeah, 0:16:06.240 --> 0:16:08.200 as you as you point out, the FTC has an 0:16:08.200 --> 0:16:11.680 existing consent decree that's eleven years old with Twitter. It 0:16:11.720 --> 0:16:14.200 will surely take a close look at whether um it 0:16:14.320 --> 0:16:16.200 is living under the terms of that. But I don't 0:16:16.200 --> 0:16:18.040 think there's any doubt. One of the things that was 0:16:18.080 --> 0:16:20.440 a big topic of conversation today was whether the federal 0:16:20.480 --> 0:16:23.800 government has enough resources. You saw Lindsay Graham talking about 0:16:23.840 --> 0:16:26.160 let's create a new agency, but the reality is that 0:16:26.160 --> 0:16:29.320 we're not funding the agencies we have. The FTC. Last 0:16:29.360 --> 0:16:31.360 year there was a proposal, for example, by the Biden 0:16:31.400 --> 0:16:34.680 administration to create a whole new bureau at the FTC 0:16:34.800 --> 0:16:37.800 focusing on privacy and data security. And that's a very 0:16:37.800 --> 0:16:42.480 good idea, but unfortunately Republicans killed that proposal right that 0:16:42.520 --> 0:16:44.280 was going to be a billion dollars and more funding, 0:16:44.360 --> 0:16:47.160 including some of the same Republicans who were complaining today 0:16:47.160 --> 0:16:50.320 about the FTC not doing enough. So there's a lot 0:16:50.360 --> 0:16:52.680 more policymakers can do. They can also pass a consumer 0:16:52.720 --> 0:16:55.520 privacy bill. They've been stalling on that, and the FTC 0:16:55.600 --> 0:16:58.320 has been looking at this question of issuing more comprehensive 0:16:58.360 --> 0:17:00.720 data security rules for all company needs to follow. They've 0:17:00.720 --> 0:17:02.920 been reluctant to do that. They prefer and said to 0:17:02.920 --> 0:17:05.240 reach settlements with individual companies, but the problem is that 0:17:05.280 --> 0:17:09.199 doesn't set clear security rules for other companies to follow. 0:17:09.400 --> 0:17:12.160 They've just recently kicked off a rulemaking and I think 0:17:12.160 --> 0:17:14.400 there's a good case to be made that rulemaking should 0:17:14.440 --> 0:17:20.920 focus as much on data security as on privacy. Uh, Alex, 0:17:21.040 --> 0:17:25.320 what's next? Uh, we're now about a month away from 0:17:25.440 --> 0:17:28.600 the day that this trial is supposed to start. Elon 0:17:28.720 --> 0:17:33.520 Musk the Twitter, Yeah we are. What's next is going 0:17:33.520 --> 0:17:36.280 to be continuing this kind of evidentiary process for them 0:17:36.600 --> 0:17:39.720 against this backdrop of what's going on in d C. Emily, Um, 0:17:39.760 --> 0:17:42.639 you know there's a home in security hearing tomorrow where 0:17:42.680 --> 0:17:46.240 one of Twitter's executives will be there alongside Meta YouTube 0:17:46.240 --> 0:17:49.639 and TikTok execs as well. So I think for Twitter 0:17:49.760 --> 0:17:53.320 they'll have these kind of um dueling perhaps distractions, um, 0:17:53.920 --> 0:17:56.680 big ones at that for whether or not this deal 0:17:56.680 --> 0:18:00.760 gets done. With Musk, we saw that Musk was walking today. 0:18:00.840 --> 0:18:03.760 He was tweeting, perhaps a little bit cheekily. But we 0:18:03.840 --> 0:18:06.199 do know that with Elon Musk sometimes the jokes do 0:18:06.320 --> 0:18:09.560 turn serious. Um. So I'm sure that there will be 0:18:09.600 --> 0:18:11.800 continue to be um kind of bobs and weaves on 0:18:11.840 --> 0:18:14.439 that side of the deal as well, in as in 0:18:14.560 --> 0:18:17.400 d C. In terms of if there is any kind 0:18:17.440 --> 0:18:20.760 of action here, um to Adam's point, after Francis Howgan, 0:18:20.800 --> 0:18:23.840 the Facebook whistle blower, did um, you know, go down 0:18:23.920 --> 0:18:26.480 to Washington. There are a lot of bills proposed. There 0:18:26.480 --> 0:18:29.400 hasn't been a ton of significant changes yet. So if 0:18:29.400 --> 0:18:32.600 there is any moves on the kind of political worry 0:18:32.680 --> 0:18:35.840 side on data privacy, um, if history is any guide, 0:18:35.880 --> 0:18:37.800 those might be a little bit slower than what we 0:18:37.880 --> 0:18:41.080 might see on the than the the deal that is 0:18:41.119 --> 0:18:45.639 expected to go to court in October. All right, bloombergs 0:18:45.600 --> 0:18:49.240 Alex Barnka, Adam Kovakovich of the Chamber of Progress, thank 0:18:49.240 --> 0:18:52.359 you both for your commentary today. Obviously, we're going to 0:18:52.400 --> 0:19:04.439 continue to watch every twist and term Meta says it 0:19:04.480 --> 0:19:07.400 needs its rivals to share some of their most closely 0:19:07.440 --> 0:19:11.400 held secrets in order to defend its antitrust suit. Meta 0:19:11.440 --> 0:19:14.879 has subpoenut a hundred thirty two companies for documents, including snap, 0:19:14.920 --> 0:19:17.920 TikTok and Clubhouse, and it says this will help its 0:19:17.960 --> 0:19:21.040 argument against the FTC lawsuit claiming the company has a 0:19:21.080 --> 0:19:26.760 monopoly in social networking. A trial isn't likely until at 0:19:26.800 --> 0:19:31.639 the earliest. And it was a huge night for streamers, 0:19:31.720 --> 0:19:36.160 particularly HBO and Apple at the Emmy's last Night Warner Brothers, Discovery, 0:19:36.600 --> 0:19:40.880 It's HBO taking home twelve awards, mostly thanks to Succession 0:19:40.960 --> 0:19:44.280 and White, Lotus and Apple to call the Top Comedy 0:19:44.320 --> 0:19:47.840 Award for ted Lass, Netflix scoring three Emmy wins, including 0:19:47.840 --> 0:19:51.080 Outstanding Lead Actor for Squid Game. The Emmys have become 0:19:51.119 --> 0:19:54.680 a focal point of the competition between the largest media 0:19:54.720 --> 0:20:06.760 and tech companies and their streaming services. Welcome back to 0:20:06.760 --> 0:20:09.399 Bombre Technology and Emily Check in San Francisco. Let's Dick 0:20:09.480 --> 0:20:12.119 with the techdown turn bringing Robert camp Will, portfolio manager 0:20:12.160 --> 0:20:14.680 at Upholdings. Robert, how are you moving your money around 0:20:15.119 --> 0:20:20.159 right now after a day like today? Well relative to 0:20:20.240 --> 0:20:23.840 earlier this year when we kept watching tech fall today, 0:20:23.880 --> 0:20:27.000 the entire market fell with it, So that's a little 0:20:27.000 --> 0:20:29.680 bit of a different setup for investors. And you've you've 0:20:29.720 --> 0:20:32.080 got a lot of investor conferences going on right now 0:20:32.119 --> 0:20:36.119 that software companies are reporting reasonably strong numbers. They're not 0:20:36.200 --> 0:20:39.520 softening their guidance, they're not pre announcing a bad quarter. 0:20:39.960 --> 0:20:42.760 So we have we have yet to hear on the 0:20:42.800 --> 0:20:45.480 micro side of things from what companies are reporting that 0:20:45.560 --> 0:20:48.880 things have in fact worsen. But what what you're continuing 0:20:48.960 --> 0:20:51.879 to see is these multiples are moving around really fast. 0:20:52.280 --> 0:20:55.440 And you know that came from the ten year interest 0:20:55.520 --> 0:20:58.800 rate expectations being the highest they've been in twelve years, 0:20:59.440 --> 0:21:01.440 and so we've seeing that hit tech the hardest because 0:21:01.440 --> 0:21:03.320 as as you've covered, you know these boltics will come 0:21:03.359 --> 0:21:05.439 down a lot. But we still see some pockets of 0:21:05.480 --> 0:21:08.000 expensiveness in tech, So we don't think the market is 0:21:08.080 --> 0:21:14.680 necessarily bottomed everywhere. Where are the pockets. Well, you've got 0:21:14.800 --> 0:21:19.320 Snowflake still at at at thirty times revenue, and it's 0:21:19.320 --> 0:21:21.960 a it's an excellent company with an excellent product, and 0:21:22.160 --> 0:21:25.440 their customers are really excited about giving the company more money, 0:21:25.520 --> 0:21:28.600 but they're also plowing every dollar of gross profit into 0:21:28.680 --> 0:21:31.920 sales and marketing. So as we've been talking more about 0:21:32.040 --> 0:21:35.680 this profitless tech um, we've been we've been seeing the 0:21:36.359 --> 0:21:40.280 tech universe splinter here a bit where you've got companies that, 0:21:40.600 --> 0:21:44.119 let's say streaming and e commerce that have been showing 0:21:44.200 --> 0:21:47.720 low returns on investment for for years now, and it's 0:21:47.800 --> 0:21:51.240 unlikely that that those companies are going to recover because 0:21:52.080 --> 0:21:54.920 Amazon building another fulfillment center is not actually generating a 0:21:54.960 --> 0:21:57.240 lot of cash flow back to Amazon. But on the 0:21:57.280 --> 0:21:59.320 other side of the spectrum, with what Meta is building, 0:21:59.320 --> 0:22:02.240 with what's Google, Google's building every dollar that Google puts 0:22:02.240 --> 0:22:05.960 into capex or new head count, they see sixty more 0:22:06.000 --> 0:22:08.959 cents of operating cash in the next year. So we 0:22:09.040 --> 0:22:12.640 see two worlds forming within the tech universe here with 0:22:12.640 --> 0:22:15.200 with with those that are generating, you know, real incremental 0:22:15.320 --> 0:22:18.760