WEBVTT - Intel Tumbles and FCC Commissioner Carr Talks TikTok 0:00:14.160 --> 0:00:17.599 I'm Caroline Hide at Bloomberg's San Francisco studio and med Lovelow. 0:00:17.640 --> 0:00:20.720 This is Bloomberg Technology and it is technology earnings. Caroline, 0:00:20.720 --> 0:00:23.640 that continued to drive these markets. That's where the energy 0:00:23.720 --> 0:00:25.600 is and that's where the news flowers. And whether these 0:00:25.640 --> 0:00:27.600 after our moves are going to start away some of 0:00:27.600 --> 0:00:30.120 that enthusiasm coming up, We've got to dig into Intel, 0:00:30.160 --> 0:00:34.000 of course, tunneling after a week forecast selling more semiconductor 0:00:34.040 --> 0:00:38.400 stocks lower. Then our exclusive interview with SEC Commissioner Brendan 0:00:38.479 --> 0:00:42.000 Carr about how a nationwide TikTok ban would actually work, 0:00:42.240 --> 0:00:45.360 and we asked chat TPT to come with a market 0:00:45.400 --> 0:00:48.400 beating e t F. We're bringing the results, so let's 0:00:48.440 --> 0:00:52.000 get straight into it with Angelo Zeno, analyst at c 0:00:52.240 --> 0:00:53.800 f R A. I mean, and I brought you that 0:00:53.840 --> 0:00:57.279 top line forecast for the current period, but what were 0:00:57.320 --> 0:01:00.640 your takeaways from the Intel print you email that in 0:01:00.800 --> 0:01:03.640 terms of maybe what's driving the downside and in the 0:01:03.840 --> 0:01:06.560 shaws after hours the guide down and people were looking 0:01:06.600 --> 0:01:08.760 to fill down party percent. I think the outlook was 0:01:09.080 --> 0:01:12.319 U the consensus is looking down about center, so so 0:01:12.640 --> 0:01:14.400 um that was really the big miss on that side 0:01:14.440 --> 0:01:16.679 of things. But I think, um, you know, you kind 0:01:16.680 --> 0:01:19.520 of think about what's really driving the lower guide on 0:01:19.560 --> 0:01:22.000 the sales side of things. It's really kind of two factors, right. 0:01:22.040 --> 0:01:24.640 It's it's the kind of the weakness we're seeing on 0:01:24.680 --> 0:01:26.920 the PC side of things. But things are, you know, 0:01:27.000 --> 0:01:30.360 significantly weaker than I think most people anticipated. And when 0:01:30.360 --> 0:01:32.000 you kind of look at the Q four numbers, I 0:01:32.040 --> 0:01:35.440 think PC down sales down about percent in the fourth quarter. 0:01:35.840 --> 0:01:38.720 So I think, um, you kind of need further settle 0:01:38.880 --> 0:01:42.200 in declines versus to sell through before we kind of 0:01:42.200 --> 0:01:44.120 fully get to the bottom. And I think maybe the 0:01:44.120 --> 0:01:47.760 good sign is that's sharp decline in sales guide maybe 0:01:47.960 --> 0:01:50.560 is hopefully a good indication that maybe we kind of 0:01:50.600 --> 0:01:53.480 get past this maybe by the second quarter. And then 0:01:53.520 --> 0:01:55.920 I said, the other factor in terms of sales bag 0:01:56.200 --> 0:01:58.280 is on a day data center side of things. I mean, 0:01:58.320 --> 0:02:00.640 it'll be interesting to kind of see how weak things 0:02:00.640 --> 0:02:03.440 are there, but clearly a lot of inventory built up there. 0:02:03.520 --> 0:02:06.160 But um, I think that's kind of really what stronggy 0:02:06.200 --> 0:02:09.520 about the weakness of the guidance of things and a 0:02:09.520 --> 0:02:12.799 lot of self help needed because otherwise depending on ordering 0:02:12.800 --> 0:02:15.360 a components, that depending on people working through our inventory. 0:02:15.400 --> 0:02:17.760 Are they doing enough self help particular on the cost side, 0:02:17.840 --> 0:02:20.400 You know, yeah, when you look at the margins here, right, 0:02:20.480 --> 0:02:23.720 especially the margin guidance, the gross margin guidance here at 0:02:23.720 --> 0:02:26.880 thirty nine percent, I mean, I think the answer there is, UM, 0:02:26.919 --> 0:02:29.919 there's probably more that they need to do or UM, 0:02:29.960 --> 0:02:31.880 it'll be interesting to kind of really figure out what's 0:02:31.919 --> 0:02:34.639 going on in the margins there, because thirty by far 0:02:34.720 --> 0:02:37.320 at this point in time, UM the lowest among our 0:02:37.400 --> 0:02:40.840 coverage universe within the semiconductor industry. So UM, that in 0:02:40.919 --> 0:02:44.120 itself is saying a lot there. Now, the big problem 0:02:44.160 --> 0:02:47.960 here is UM, they're looking to do a massive kind 0:02:48.000 --> 0:02:51.680 of undertaking in terms of technology transitions. For technology transitions 0:02:51.680 --> 0:02:55.040 in five years, never been done within the semi conductor industry. 0:02:55.360 --> 0:02:57.720 They need to get this right. This management team needs 0:02:57.720 --> 0:03:00.440 to get it right first and foremost, even it means 0:03:00.560 --> 0:03:02.440 losing money here in the near term, which is what's 0:03:02.480 --> 0:03:05.320 going to happen in the first quarter. So UM, at 0:03:05.360 --> 0:03:07.840 this point in time, that is kind of the most 0:03:07.919 --> 0:03:11.960 important factor for them. They didn't provide any guidance here. 0:03:12.000 --> 0:03:16.000 For my guest is the capets guy probably has to 0:03:16.040 --> 0:03:19.400 go down relative to what we saw in two sort 0:03:19.440 --> 0:03:21.440 of going to look to do some things here, right, 0:03:21.600 --> 0:03:23.919 um they you know, they did announce some cost cuts 0:03:23.919 --> 0:03:26.359 in a third order a couple of months ago. They're 0:03:26.360 --> 0:03:28.560 going to execute on that, but at this point in time, 0:03:29.000 --> 0:03:31.959 it's hard to cut given what they've done in front 0:03:31.960 --> 0:03:34.560 of them. Got it? And you mentioned there no full 0:03:34.639 --> 0:03:37.320 year twenty three guidance in the earnings statement. I can 0:03:37.440 --> 0:03:40.520 confirm the earnings cause started in the company saying it 0:03:40.600 --> 0:03:43.040 is not going to give full year guidance for full 0:03:43.120 --> 0:03:46.280 year twenty three. They're also talking about the macro difficulties 0:03:46.280 --> 0:03:49.080 they're seeing lasting through the first half of this year. 0:03:49.480 --> 0:03:53.040 Guide into long term PC market of three hundred million units. 0:03:53.440 --> 0:03:55.520 Break it down to very simple terms for us, What 0:03:55.840 --> 0:03:59.000 is the problem for Intel? Yeah, I mean yeah, well, 0:03:59.080 --> 0:04:02.000 first and foremost, like, I think the competitive environment. It 0:04:02.200 --> 0:04:04.960 has been by far their biggest issue in recent years, right, 0:04:05.080 --> 0:04:07.320 I mean, despite the fact that you know that they 0:04:07.320 --> 0:04:10.120 may all do it otherwise. Um A m D has 0:04:10.160 --> 0:04:13.120 definitely been kind of chipping away in terms of market 0:04:13.160 --> 0:04:16.600 share um On specifically on their certain data center server 0:04:16.720 --> 0:04:19.320 side of things, which has kind of been historically kind 0:04:19.360 --> 0:04:22.880 of a very good, kind of um profitable business for 0:04:23.080 --> 0:04:25.360 this company, and it no longer is, at least at 0:04:25.360 --> 0:04:28.000 this point in time. So I think the competitive environment 0:04:28.040 --> 0:04:30.600 clearly is a problem for them. The cycle is the 0:04:30.600 --> 0:04:33.080 the other issue for them here I mean being overly 0:04:33.120 --> 0:04:36.440 exposed to really two care areas of the market, one 0:04:36.560 --> 0:04:39.520 being um PCs, which you know was a three hundred 0:04:39.520 --> 0:04:44.599 fifty million unit market UM in one UM was down 0:04:44.640 --> 0:04:48.680 about last year. Probably looking at this point in time, 0:04:48.680 --> 0:04:51.480 given the guidance, you're looking probably down at least teen 0:04:51.520 --> 0:04:55.160 percent UM here in three. Again, so the cycles and 0:04:55.240 --> 0:04:57.560 other ratios, specifically on the PC side of things, and 0:04:57.600 --> 0:04:59.520 now also on the data center side of things, which 0:04:59.520 --> 0:05:03.160 started I can as Angelosino, great to have your instant analysis. 0:05:03.160 --> 0:05:06.360 Thank you, cfr A there. Meanwhile, let's get onto another 0:05:06.440 --> 0:05:09.320 key story is again about Salesforce sources saying that they 0:05:09.320 --> 0:05:12.880 may appoint new board members amid pressure from activist investors. 0:05:12.960 --> 0:05:15.920 Now the list of possible appointments includes Carnivals former CEO, 0:05:16.040 --> 0:05:20.000 Maskcards current CFO, and an investor value APTS chief. In fact, 0:05:20.320 --> 0:05:23.480 Salesforce had in fact been working on refreshing its board 0:05:23.480 --> 0:05:26.640 for several months. We understand as pressure of course continues 0:05:26.680 --> 0:05:29.360 to mount to boost profits and shareholder returns. Let's get 0:05:29.360 --> 0:05:32.160 straight to Ed Hammonds. You broke the news. What would 0:05:32.240 --> 0:05:35.760 these individuals bring to the board, Like Caroline, I think, 0:05:35.800 --> 0:05:38.440 first and foremost probably a proper lactic against the other 0:05:38.440 --> 0:05:41.480 activists who are circling this company. I mean Starboarder there, 0:05:41.520 --> 0:05:45.599 Elliott there, we think Jeff Ubburn with his inclusive capital 0:05:45.680 --> 0:05:48.760 funder there. And you see this fairly often in these 0:05:48.800 --> 0:05:52.040 bigger companies that might have several dissident shareholders that they 0:05:52.040 --> 0:05:55.160 will strike a deal with one group um and bring 0:05:55.200 --> 0:05:56.880 some of those onto the board. And as I say, 0:05:56.880 --> 0:05:59.880 it's often a way of really defending against some of 0:05:59.880 --> 0:06:01.800 the other activists and what they might see as some 0:06:01.920 --> 0:06:06.520 of the less savory claims against the company. Why is 0:06:06.600 --> 0:06:10.280 Salesforce under attack from so many different activists right now? 0:06:10.600 --> 0:06:13.600 I think a couple of reasons. That the first is 0:06:13.600 --> 0:06:15.839 is less exciting if you like, which is that it's 0:06:15.880 --> 0:06:18.960 it's just a safe, better minutes down I think from 0:06:18.960 --> 0:06:23.359 its highs. But unlike some of the smaller companies that 0:06:23.480 --> 0:06:26.040 they might normally target, it's unlikely to get wiped out, 0:06:26.080 --> 0:06:28.240 so you have quite a safe place to park your 0:06:28.240 --> 0:06:30.800 money one way or another. The other reason, and I 0:06:30.839 --> 0:06:32.680 think This applies to a lot of big tech companies. 0:06:32.839 --> 0:06:35.800 Is it just doesn't have great corporate governance historically, and 0:06:35.800 --> 0:06:38.840 and that that has been okay when the market was 0:06:39.000 --> 0:06:41.320 rising and everything was looking great, but as soon as 0:06:41.320 --> 0:06:43.320 things start looking bad, these tend to be the first 0:06:43.360 --> 0:06:47.360 companies they get raked over by the activists, and you're 0:06:47.360 --> 0:06:49.960 seeing that in some other big tech companies as well. Um. 0:06:50.000 --> 0:06:52.479 I also think there has been a sort of series 0:06:52.480 --> 0:06:55.960 of acquisitions that have been quite large and not necessarily 0:06:56.400 --> 0:06:59.320 that successful. And despite Benny Off saying that he was 0:06:59.320 --> 0:07:01.239 going to slow down on that, he obviously has continued 0:07:01.279 --> 0:07:03.239 to do it. And I think stuff like that really 0:07:03.279 --> 0:07:05.000 is is kind of a red rag to an activist 0:07:05.080 --> 0:07:07.799 because they know that there will be some long only investors, 0:07:08.040 --> 0:07:11.040 potentially even some retail investors who have similar discontent about that. 0:07:11.240 --> 0:07:13.600 So when it comes to Tableau, when it comes to Slack, 0:07:13.720 --> 0:07:16.080 are we going to see such names as this push 0:07:16.160 --> 0:07:19.400 for disposals? Is it further cost cutting? What sort of 0:07:19.400 --> 0:07:21.600 discipline do they want? Yeah, it's a great question and 0:07:21.640 --> 0:07:24.200 at this point we don't know is the answer. I mean, look, 0:07:24.240 --> 0:07:27.400 Elliott have been most public in terms of their recent statements, 0:07:27.440 --> 0:07:29.240 have said they like many off, they like the company, 0:07:29.280 --> 0:07:31.600 they want to work constructively. That usually is sort of 0:07:31.600 --> 0:07:34.560 activist code for let us into the boardroom. We will 0:07:34.600 --> 0:07:36.720 give you cover to make some job cuts to perhaps 0:07:36.800 --> 0:07:39.840 would be harder to make on your on your own 0:07:39.920 --> 0:07:42.560 or of your involution. UM. In terms of spinning off 0:07:42.560 --> 0:07:44.520 and separating assets, yeah, I think there is a case 0:07:44.560 --> 0:07:47.280 to be made for some investitures here. But again, some 0:07:47.360 --> 0:07:49.680 of these deals that were struck at a fairly high 0:07:49.760 --> 0:07:51.840 point in the market, it's difficult to see sales force 0:07:51.920 --> 0:07:55.160 just exiting and getting anything other than a discount doing those. 0:07:55.360 --> 0:07:58.880 Hammond terrific reporting that scoop moving the stock to his 0:07:58.920 --> 0:08:10.320 biggest game since November. Thank you. National security concerns are 0:08:10.360 --> 0:08:14.240 concerns that we take extremely seriously. UM. As we have 0:08:14.520 --> 0:08:17.480 this closed in the past, we have had discussions with 0:08:17.520 --> 0:08:20.120 the U. S. Government, but I'm very confident that to 0:08:21.640 --> 0:08:23.840 the detailed discussions that we are going to have, we 0:08:23.880 --> 0:08:26.800 will come up with a solution that will reasonably address 0:08:27.040 --> 0:08:32.760 the national security concerns that the policy makers have. TikTok 0:08:32.840 --> 0:08:35.240 CEO there show too. That was at the Bloomberg New 0:08:35.280 --> 0:08:38.040 Economy Forum in Singapore back in November. Addressing at the 0:08:38.080 --> 0:08:40.840 time national security concerns from the United States, and since 0:08:40.880 --> 0:08:44.280 then those concerns they've been building up. No action still 0:08:44.320 --> 0:08:47.000 from the administration, and some states have actually started to 0:08:47.040 --> 0:08:49.480 take it upon themselves to implement some curbs on the 0:08:49.480 --> 0:08:52.160 popular app, like ll Texas for instance. Of course, some 0:08:52.320 --> 0:08:55.719 universities there and now banned the app on their campus networks. 0:08:56.160 --> 0:08:59.199 Will help. What more should be done? Let's bring in 0:08:59.360 --> 0:09:02.319 someone has been vocal on all of this, SEC Commissioner, 0:09:02.520 --> 0:09:04.960 Brendan Carr, Commissioner, it is great to have some time 0:09:04.960 --> 0:09:07.320 with you, and you have been outspoken about the concerns 0:09:07.360 --> 0:09:11.200 you see around TikTok. What from your perspective can you, 0:09:11.320 --> 0:09:14.079 as an FCC commissioner do Is it about speaking out 0:09:14.080 --> 0:09:16.280 to or out or action can you take? Then? We 0:09:16.320 --> 0:09:19.040 have some expertise and experience in this area at the FEC. 0:09:19.160 --> 0:09:21.760 We've dealt with Huawei's E t E China Mobile, a 0:09:21.800 --> 0:09:24.680 lot of companies with ties back to communist China that 0:09:24.720 --> 0:09:26.800 are involved with the various data flows. That's why I'm 0:09:26.800 --> 0:09:28.719 speaking out. In the main though, the action here is 0:09:28.760 --> 0:09:31.840 going to come from the Biden administration, the Treasury Department, SIPPIUS, 0:09:31.880 --> 0:09:34.439 the Committee on Foreign Investment, has been reviewing this for 0:09:34.480 --> 0:09:36.800 almost two years now. I think the reality is is 0:09:36.840 --> 0:09:39.280 the tide really has been moving out on TikTok. I 0:09:39.280 --> 0:09:41.520 think it's had a very bad two months, and I 0:09:41.559 --> 0:09:44.400 think it's shifted now from a question of whether there's 0:09:44.440 --> 0:09:47.080 going to be some sort of band or decoupling of 0:09:47.120 --> 0:09:50.600 TikTok from Beijing to a question of when that takes place. Now, 0:09:50.760 --> 0:09:52.680 TikTok is still spending a lot of money, millions of 0:09:52.679 --> 0:09:55.160 dollars to avoid that. But I definitely think things are 0:09:55.160 --> 0:09:57.599 moving in the wrong direction for TikTok. What about the 0:09:57.640 --> 0:10:01.040 direction from the administration? Do you think it will ultimately 0:10:01.080 --> 0:10:04.160 be then? And Siphius the focus there or is actually 0:10:04.160 --> 0:10:06.520 gonna be Congress because we actually see across the aisle 0:10:06.600 --> 0:10:08.680 some agreement here. It could be both. As you mentioned, 0:10:08.720 --> 0:10:12.320 there's bipartisan legislation now in Congress by Cameral actually in 0:10:12.360 --> 0:10:17.439 the House last Congress, Republican Gallagher Democrat Christiana Morphy representatives 0:10:17.440 --> 0:10:20.239 have a bill that would band TikTok nationwide. Obviously bipartisan 0:10:20.240 --> 0:10:23.679 agreement to band TikTok nationwide on federal devices, and we 0:10:23.720 --> 0:10:25.760 have almost thirty states now that have done it. It 0:10:25.800 --> 0:10:28.679 could be the Biden administration. Ultimately that takes the final 0:10:28.720 --> 0:10:30.840 action here. I think it should be there precedent for this. 0:10:30.960 --> 0:10:34.880 We've used scipious before to unwind the purchase of Grinder 0:10:34.920 --> 0:10:38.240 based on having connections back to a Beijing based entity. 0:10:38.320 --> 0:10:41.400 India has band TikTok across their entire country, so I 0:10:41.400 --> 0:10:43.960 think that's the right direction to go here. Commission Nico, 0:10:44.040 --> 0:10:47.600 good evening to you with with massive respect to your office. 0:10:48.040 --> 0:10:51.520 The FCC does not have a power or a remit 0:10:51.640 --> 0:10:55.000 to take action on this, So who are you backing 0:10:55.400 --> 0:10:58.319 to take action? Who do you think at a federal 0:10:58.520 --> 0:11:02.320 state level actually see some material change when it comes 0:11:02.320 --> 0:11:04.960 to regulating TikTok. I think SEC officials we do have 0:11:05.000 --> 0:11:08.000 some expertise here, again when it deals with companies that 0:11:08.040 --> 0:11:10.200 have ties to the CCP and the various data blows. 0:11:10.240 --> 0:11:11.720 But right in the main, I believe this is an 0:11:11.760 --> 0:11:14.680 issue that the Treasury Department should take a look at. Really, 0:11:14.720 --> 0:11:17.040 I think the biggest leader on this has been Democrats 0:11:17.120 --> 0:11:19.920 Chairman of Sending an Intel Committee, Mark Warner. He has 0:11:19.960 --> 0:11:22.719 said that quote TikTok scares the dickens out of him, 0:11:22.720 --> 0:11:25.320 and he's been working with Senator Rubio and others on this, 0:11:25.360 --> 0:11:27.280 So it could be Treasury, could be Federal Trade Commission 0:11:27.360 --> 0:11:28.839 for as we talked about earlier, there's a lot of 0:11:28.880 --> 0:11:31.840 interest in the House, bipartisan interest in taking action there. 0:11:31.840 --> 0:11:34.000 So I think it's gonna come from action on several fronts, 0:11:34.040 --> 0:11:36.520 states included. I don't anticipate this will be a poor 0:11:36.800 --> 0:11:40.800 FCC issue itself, though, Yes, Commissioning you mentioned India. We 0:11:40.840 --> 0:11:44.560 went to our audience and as then if they felt 0:11:44.600 --> 0:11:47.760 that what they saw the action taken in India could 0:11:47.760 --> 0:11:53.840 be replicated here in the United States. Seventy respondents said yes, uh, 0:11:53.880 --> 0:11:57.160 it sets an important precedent. Does the action taken in 0:11:57.240 --> 0:11:59.800 India set an important precedent? I think so it's a 0:12:00.280 --> 0:12:03.760 strong precedent. You know, India's obviously the world's largest democracy, 0:12:04.040 --> 0:12:07.040 so I think taking action in that context is very instructive. 0:12:07.040 --> 0:12:09.200 And again, there's two main issues here. There's national security 0:12:09.440 --> 0:12:12.400 but also mental health. You know, on the national security side, 0:12:12.640 --> 0:12:15.760 TikTok came clean just last month and said yes, in fact, 0:12:15.800 --> 0:12:19.360 they had been surveilling the locations of specific U S 0:12:19.400 --> 0:12:23.240 reporters who are writing negative stories about TikTok. That's sort 0:12:23.240 --> 0:12:25.439 of a nightmare scenario. Remember, we're at a point in 0:12:25.440 --> 0:12:28.200 time where TikTok has been engaged in negotiations with Sippius, 0:12:28.200 --> 0:12:30.880 where they have every reason to be on their best behavior, 0:12:30.920 --> 0:12:32.520 and yet they were engaged in that type of ne 0:12:32.640 --> 0:12:35.400 various conduct. Trust is the most important thing right now 0:12:35.400 --> 0:12:37.520 when you're trying to negotiate with the government. And if 0:12:37.520 --> 0:12:39.960 I was in the Bide administration at Sippius, I'd be 0:12:39.960 --> 0:12:43.080 really disappointed if I had this draft agreement with TikTok 0:12:43.160 --> 0:12:45.760 that was in place over the over the summer and 0:12:45.800 --> 0:12:48.160 you see this subsequent conduct, I think it's it just 0:12:48.200 --> 0:12:50.680 shows that Um, I just don't see a path forward 0:12:50.720 --> 0:12:52.400 where you could cut a deal that will put air 0:12:52.400 --> 0:12:55.920 tight protections in place. So ultimately you feel aban is 0:12:55.960 --> 0:12:58.640 the only way. It's interesting to EU before was sort 0:12:58.640 --> 0:13:01.000 of not talking as tough enough. Now in their lexicon, 0:13:01.080 --> 0:13:03.760 the word band has become on the tip of that tongue. 0:13:03.800 --> 0:13:07.120 We've also been here seeing it from India. As we mentioned, 0:13:07.840 --> 0:13:09.840 is there no way that a deal could be done 0:13:09.840 --> 0:13:13.160 with Oracle, no way that TikTok could convince there is 0:13:13.200 --> 0:13:16.199 a safe way of still continuing to operate in the US. Yeah, 0:13:16.240 --> 0:13:17.840 I just don't see that you mentioned Europe is starting 0:13:17.880 --> 0:13:19.720 to sort of ramp up their activity just this week. 0:13:19.760 --> 0:13:22.920 I think government officials in the Netherlands band TikTok from 0:13:23.040 --> 0:13:25.439 federal devices. There Again, it fundamentally comes down to trust. 0:13:25.480 --> 0:13:29.160 And there was leaked internal communications um that Forbes got 0:13:29.480 --> 0:13:33.560 over the summer UH and they showed that a TikTok 0:13:33.679 --> 0:13:35.880 officials said that even if all these protections are in 0:13:35.920 --> 0:13:38.400 put in place, this project Texas that they talk about 0:13:38.400 --> 0:13:40.600 a lot that involves oracle that according to them, it 0:13:40.600 --> 0:13:43.960 remains to be seen whether product and engineering, meaning Beijing 0:13:44.240 --> 0:13:47.840 could still get access to this data. So if officials 0:13:47.840 --> 0:13:50.360 inside TikTok aren't certain that these protections are gonna be 0:13:50.400 --> 0:13:52.240 air tight, I don't think that we should think that 0:13:52.240 --> 0:13:54.040 they would be either. And again, if you look an analysts, 0:13:54.040 --> 0:13:57.200 one analyst in particular had odds of a TikTok band 0:13:57.200 --> 0:13:59.680 at around ten percent this summer and towards the end 0:13:59.720 --> 0:14:02.120 of last fall. They had up to now was before 0:14:02.160 --> 0:14:05.040 the bipartisan bill was introduced, else before you saw some 0:14:05.080 --> 0:14:07.480 of these recent revelations. So I think things are moving 0:14:07.480 --> 0:14:09.200 in the wrong way. But again we'll see they're spending 0:14:09.200 --> 0:14:11.360 an awful lot of money to try to stop a 0:14:11.400 --> 0:14:14.400 band or a decoupling commission. It is one part of 0:14:14.400 --> 0:14:17.520 this equation we've not discussed, which is the TikTok user 0:14:17.960 --> 0:14:20.520 here in the United States. Lots of people love using 0:14:20.560 --> 0:14:24.560 that app. Uh. Many have told us they don't understand 0:14:24.640 --> 0:14:29.680 the risks. They're not well explained. Why should TikTok be banned? 0:14:29.680 --> 0:14:33.040 How would you justify it to them? Those million plus 0:14:33.160 --> 0:14:35.880 users that are saying we want this again, it's too fold. 0:14:35.880 --> 0:14:38.200 It's national security and mental health. On the NAS security 0:14:38.240 --> 0:14:41.120 side again, it's it's pulling all sorts of sensitive data, 0:14:41.160 --> 0:14:44.920 everything from search and browsing history, keystroke patterns, potentially according 0:14:44.960 --> 0:14:48.080 to terms of service biometrics, which includes base prints and voiceprints. 0:14:48.160 --> 0:14:51.000 And for years they misrepresented where this was going. Uh. 0:14:51.120 --> 0:14:53.920 Internal communications again show that everything is viewed inside China. 0:14:53.960 --> 0:14:57.160 That's why FBI Director Chris Ray and others are raising 0:14:57.200 --> 0:14:59.360 the alarm. But the mental health side is interesting as well. 0:14:59.560 --> 0:15:01.560 There was a recent report side by New York Times 0:15:01.600 --> 0:15:03.800 that had account set up for a thirteen year old 0:15:03.840 --> 0:15:05.960 girls that within a matter of thirty minutes, was showing 0:15:06.000 --> 0:15:09.840 eating disorder self harm content. And flash forward to the 0:15:09.960 --> 0:15:12.360 version of tiktok' is available in China doy On, and 0:15:12.400 --> 0:15:15.600 it's not showing that it's showing education materials. Museum exhibits 0:15:15.600 --> 0:15:19.080 science experiments. So it's very troubling both from a national 0:15:19.080 --> 0:15:22.800 security data security side, but also the mental health side. Okay, 0:15:22.840 --> 0:15:25.720 but the mental health issues have been leveled not just 0:15:25.760 --> 0:15:30.400 at TikTok, but at homegrown social media platforms Instagram. I'm 0:15:30.440 --> 0:15:33.320 often having to respond to such concerns. How if we 0:15:33.400 --> 0:15:37.520 banned TikTok and uses move perhaps to YouTube, shorts and Instagram, 0:15:37.520 --> 0:15:39.840 how do we prevent that sort of element happening here. Yeah, 0:15:39.840 --> 0:15:42.240 there's a baseline level of of privacy protection, so we 0:15:42.280 --> 0:15:43.760 need to put in place. I'm actually open to taking 0:15:43.760 --> 0:15:46.960 a look at increased age restrictions for social media. Generally, 0:15:46.960 --> 0:15:49.240 a lot of this, to your point, goes to social 0:15:49.280 --> 0:15:51.200 media apps beyond TikTok. Again, I think there's something very 0:15:51.280 --> 0:15:53.800 unique about TikTok that's exposed by the fact that you 0:15:53.840 --> 0:15:56.000 can compare what it shows to kids in the US 0:15:56.120 --> 0:15:57.880 versus kids in China. But I do think there's a 0:15:57.880 --> 0:15:59.480 broader issue we have to deal with here. It's sort 0:15:59.480 --> 0:16:01.520 of like how do you eat an elephant? Though? It's 0:16:01.520 --> 0:16:03.320 it's one bite at a time. I think there's broader 0:16:03.400 --> 0:16:05.720 data flow concerns to go back to China with all 0:16:05.760 --> 0:16:08.600 sorts of applications and data brokers. But we've been looking 0:16:08.600 --> 0:16:10.640 at TikTok for two years. We have a big case 0:16:10.680 --> 0:16:13.000 developed on that we should take that action, and then 0:16:13.040 --> 0:16:15.120 I think it makes it easier to then deal with 0:16:15.200 --> 0:16:17.120 knock on case and say, well, this is like TikTok, 0:16:17.160 --> 0:16:18.800 We've dealt with it. That's what we've done in other 0:16:18.840 --> 0:16:21.040 context again, we went with whah wait first at the FCC, 0:16:21.200 --> 0:16:23.320 then z t E, then Shina Mobile. I think that's 0:16:23.320 --> 0:16:26.040 how we sort of approach this broader issue, Commissioner. I 0:16:26.080 --> 0:16:28.160 think what we keep hearing is we've we've been looking 0:16:28.160 --> 0:16:31.560 at this for two years. These things do not work well. 0:16:31.600 --> 0:16:35.200 I don't think Caroline and I hearing from people in 0:16:35.240 --> 0:16:38.680 your position from the company's is an actual solution. Are 0:16:38.720 --> 0:16:43.400 you going to suggest that Apple or Alphabet through Google 0:16:43.520 --> 0:16:46.000 just don't make the app available through their stores? How 0:16:46.040 --> 0:16:49.200 are you going to actually make this happen? And that's 0:16:49.240 --> 0:16:51.880 one one appetite that that I've thrown out there is 0:16:51.880 --> 0:16:53.400 this idea that you can look at Apple and Google 0:16:53.440 --> 0:16:56.080 have them remove it from the app store, obviously India 0:16:56.120 --> 0:16:58.680 as an example, grinder as a precedent here in the US, 0:16:58.720 --> 0:17:00.760 where we've banned an app through with the Sipius review, 0:17:00.840 --> 0:17:03.320 at least in that case required the sale. I think 0:17:03.360 --> 0:17:06.040 all of those our potential actions that can be taken here, 0:17:06.040 --> 0:17:08.720 and I think TikTok actually is uniquely replaceable. Again, a 0:17:08.720 --> 0:17:10.320 lot of parents look at TikTok and I think it's 0:17:10.359 --> 0:17:13.440 like Facebook or Instagram or another social media where you're 0:17:13.640 --> 0:17:15.879 following a network of people you know. But in the 0:17:15.920 --> 0:17:18.520 main with TikTok, you go on there immediately you're being 0:17:18.560 --> 0:17:21.200 fed content from Beijing. So I do think it could 0:17:21.200 --> 0:17:24.480 be replaced in with with either another owner or another 0:17:24.520 --> 0:17:28.440 short form video application relatively quickly. At c C Commissioner 0:17:28.640 --> 0:17:31.000 Brendon car with thank you for your time and the 0:17:31.080 --> 0:17:34.399 robust conversation. Frankly, and I know TikTok is a story 0:17:34.440 --> 0:17:38.560 will continue to discuss now coming up, why Morgan Stanley 0:17:38.720 --> 0:17:41.440 fired some of its own bankers find I should say 0:17:41.440 --> 0:17:44.600 some of its own bankers, and how WhatsApp is at 0:17:44.600 --> 0:17:58.520 the heart of it. This is Bloomberg. Morgan Stanley has 0:17:58.560 --> 0:18:02.000 fine some of its own anchors for some more than 0:18:02.080 --> 0:18:05.639 one million dollars each for conducting business on WhatsApp and 0:18:05.760 --> 0:18:10.800 other messaging platforms. And clearly a painful reminder, particularly if 0:18:10.800 --> 0:18:12.879 you're senior, and this is perhaps when you're facing a 0:18:12.920 --> 0:18:15.840 million of a fine rather than perhaps a couple of thousand, 0:18:16.000 --> 0:18:18.240 is how seen you are, how often you are already 0:18:18.280 --> 0:18:21.080 reprimanded and sort of a points system here. But it's 0:18:21.119 --> 0:18:23.919 interesting that these banks are paying the fines themselves and 0:18:23.960 --> 0:18:26.680 then asking for their own employer and literally clawing back 0:18:27.119 --> 0:18:29.600 bonus is already paid out because they're under that much 0:18:29.640 --> 0:18:33.000 pressure from the regulators to make sure communications for business 0:18:33.040 --> 0:18:37.040 are done properly. It's astonishing pressure from the SEC, the 0:18:37.240 --> 0:18:40.320 s CTC. Can you imagine being asked to give back 0:18:40.320 --> 0:18:43.400 a bonus that I made? I can't. I have to say. 0:18:43.480 --> 0:18:46.840 The other story that caught my eyes the Bloomberg reporting 0:18:46.840 --> 0:18:49.800 around the NYC and what was actually responsible so for 0:18:49.840 --> 0:18:52.199 according to a source in Layman's terms, it was that 0:18:52.240 --> 0:18:57.360 they didn't basically turn on off and back on again 0:18:56.359 --> 0:19:02.840 the basically deeply technological area that you're trying to ensure 0:19:02.880 --> 0:19:06.560 that there's never any disasters and through one person and 0:19:06.680 --> 0:19:11.080 one personnel issue a disaster ensued in the markets. That's right, 0:19:18.640 --> 0:19:21.040 Welcome back to me technology. I'm car High and I'm 0:19:21.080 --> 0:19:24.360 in Ludlow this week, both of us in San Francisco. Now, 0:19:24.480 --> 0:19:28.520 after a growing chorus of layoffs across the technology industry 0:19:28.800 --> 0:19:31.919 at large, one company is going against the grain. The 0:19:31.960 --> 0:19:36.879 cloud software platform Service Now will not layoff employees in 0:19:37.840 --> 0:19:41.439 three that's according to the company's CEO, Bill McDermott. So 0:19:41.560 --> 0:19:44.080 how is he going to keep that promise? Well? Fortunately, 0:19:44.560 --> 0:19:47.760 Bill joins us now on the program that that's a pledge. Bill, 0:19:48.240 --> 0:19:50.320 So how are you going to keep it? Well? We 0:19:50.359 --> 0:19:55.399 are the platform for end to end digital transformation. Customers 0:19:55.400 --> 0:19:58.639 today have two things on their mind. On one hand, 0:19:58.760 --> 0:20:02.879 they have to automate and improve their productivity and do 0:20:03.000 --> 0:20:05.199 a lot more with less, so they're really trying to 0:20:05.200 --> 0:20:08.240 take cost out of the business. On the other hand, 0:20:08.280 --> 0:20:12.720 they recognize that digital business is something they have to 0:20:13.440 --> 0:20:17.880 have to do well at, so they are investing thing 0:20:18.080 --> 0:20:21.960 and they're investing for the long term. So if you're 0:20:22.000 --> 0:20:26.480