WEBVTT - Apple Slow Hiring and Spending 0:00:02.240 --> 0:00:05.600 From the heart of where innovation, money and power collive 0:00:06.360 --> 0:00:10.880 in Silicon Valley and beyond. This is Bloomberg Technology with 0:00:10.920 --> 0:00:26.640 Emily Jay I'm Emily Jenking, San Francisco, and this is 0:00:26.680 --> 0:00:29.400 Bloomberg Technology. Coming up in the next hour stock slide 0:00:29.440 --> 0:00:32.680 on a Bloomberg scoop that Apple plans to slow hiring 0:00:32.920 --> 0:00:35.800 and spending. We've got the inside details on how the 0:00:35.800 --> 0:00:40.200 iPhone maker plans to deal with the downturn. Plus Netflix 0:00:40.200 --> 0:00:43.000 says it's late. A season of Stranger Things was even 0:00:43.000 --> 0:00:46.240 bigger than expected, But can Netflix deliver In its earnings 0:00:46.280 --> 0:00:49.239 report this week after a dismal start to the year, 0:00:49.640 --> 0:00:54.040 Stranger Things have happened, and bitcoin rally's jumping as much 0:00:54.040 --> 0:00:56.720 as seven percent to hit two dollars for the first 0:00:56.760 --> 0:01:00.520 time in weeks. What's driving the crypto rebound? To this hour, 0:01:00.640 --> 0:01:04.039 Apple plans just slow hiring and spending growth next year 0:01:04.120 --> 0:01:07.800 in some divisions. This according to Bloomberg sources. Apple is 0:01:07.800 --> 0:01:13.080 still planning an aggressive product launch schedule in including potentially 0:01:13.120 --> 0:01:16.440 a new mixed reality headset. But this news about typically 0:01:16.480 --> 0:01:20.920 recession resistant Apple taking investors by surprise. Mark German broke 0:01:20.959 --> 0:01:23.360 the story and joins us now so Mark, what exactly 0:01:23.360 --> 0:01:27.080 have you learned about Apple's plans, Emily, thank you for 0:01:27.080 --> 0:01:30.959 having me. We learned that the company going into fiscale 0:01:31.200 --> 0:01:34.120 is taking a more cautious approach to its investing and 0:01:34.200 --> 0:01:36.720 spending when it comes to hiring. So you're gonna see 0:01:36.800 --> 0:01:40.840 upon some departures over the next year or so, normal attrition. 0:01:41.000 --> 0:01:43.760 Maybe Apple won't fill some of those rules in order 0:01:43.800 --> 0:01:46.360 to save a little bit money money and be cautious there. 0:01:46.640 --> 0:01:49.600 You're probably gonna see them have headcount even in many 0:01:49.720 --> 0:01:53.040 teams instead of upgrading their headcount maybe between five and 0:01:53.080 --> 0:01:55.400 ten and fifteen percent. You're also going to see them 0:01:55.400 --> 0:01:58.120 spending a little bit less money in certain divisions as well. 0:01:58.360 --> 0:02:01.440 This is all in preparation for this looming recession we've 0:02:01.440 --> 0:02:04.080 talked about many times, and this economic downturn that people 0:02:04.120 --> 0:02:08.560 are concerned about, coupled with inflation. So talk to us 0:02:08.560 --> 0:02:11.800 about why the market is so surprised by this, are 0:02:11.840 --> 0:02:15.240 concerned by this given that Apple, you know, whether the 0:02:15.240 --> 0:02:18.359 pandemic pretty well also kind of a bell weather for 0:02:18.520 --> 0:02:22.520 consumer sentiment. I think that's exactly right, because Apple is 0:02:22.520 --> 0:02:25.280 a bell weather, right. I think that the market and 0:02:25.400 --> 0:02:28.960 analysts and people who invest trust Apple to make decisions 0:02:28.960 --> 0:02:32.000 ahead of time. If you remember when COVID nineteen started 0:02:32.040 --> 0:02:34.400 to happen in the beginning of Apple was one of 0:02:34.440 --> 0:02:36.280 the first to sort of take a stand and begin 0:02:36.320 --> 0:02:38.880 closing their stores and begin putting measures in and begin 0:02:38.919 --> 0:02:42.000 talking about that potential impact. Right. So Apple has shown 0:02:42.320 --> 0:02:44.960 that it has good insight and good research to understand 0:02:45.200 --> 0:02:47.760 when economic situations are going to happen. So I think 0:02:47.760 --> 0:02:50.359 the market knows that and traded based on that. At 0:02:50.360 --> 0:02:53.160 the same time, I don't think it's hugely surprising, given 0:02:53.160 --> 0:02:57.160 that you've seen Meta and Tesla and Amazon and Microsoft 0:02:57.240 --> 0:02:59.919 all makes similar moves. The differences is that Apple is 0:03:00.000 --> 0:03:02.119 going to try to keep that internal instead of Tim 0:03:02.120 --> 0:03:04.960 cook sending out a memo to the entire company detailing 0:03:04.960 --> 0:03:09.040 their plans for when it comes to this economic downturn. 0:03:09.440 --> 0:03:12.320 They are not going to announce that publicly, right. That's 0:03:12.320 --> 0:03:14.520 why we're reporting it based on sources, just like you've 0:03:14.520 --> 0:03:17.840 seen other companies do. Write. Apple doesn't seem to appear 0:03:18.120 --> 0:03:20.200 to believe that they're going to have a major impact 0:03:20.280 --> 0:03:23.520 on consumers because of this or employees. You're probably not 0:03:23.560 --> 0:03:25.440 going to see layoffs here. You're probably not going to 0:03:25.520 --> 0:03:28.640 see major changes to their product pipeline and their launch plans. 0:03:29.080 --> 0:03:31.640 Like you mentioned, I am still expecting the announcement of 0:03:31.680 --> 0:03:34.640 the first major new product category in eight years, a 0:03:34.720 --> 0:03:39.120 mixed reality headset to happen sometime in There's also gonna 0:03:39.120 --> 0:03:42.000 be big iPhone updates next year, Big Apple Watch updates, 0:03:42.160 --> 0:03:44.760 a larger iPad, many new max So there's a lot 0:03:44.800 --> 0:03:46.960 in store for next year. The company still wants to 0:03:46.960 --> 0:03:52.040 get out to consumers. Meantime, Mark, there's another story you're following, 0:03:52.160 --> 0:03:57.440 Apple being sued over pay and anti trust violations. Explain 0:03:57.520 --> 0:04:00.640 to us what's happening here. This one's along time coming. 0:04:00.720 --> 0:04:03.520 So basically, the way the iPhone works with Apple Pay 0:04:03.600 --> 0:04:06.320 is that Apple is the only company that can have 0:04:06.560 --> 0:04:08.160 tapped to pay so all from the phone. So you 0:04:08.200 --> 0:04:09.720 know how you want to go to Whole Foods or 0:04:09.720 --> 0:04:12.000 another place and you tap your phone on the reader 0:04:12.040 --> 0:04:14.520 to make a payment, that's only through Apple Pay. So 0:04:14.640 --> 0:04:19.080 that means that Square, PayPal, Chase, Amax, any financial provider, 0:04:19.160 --> 0:04:21.719 you name it, they're not able to develop their own 0:04:21.760 --> 0:04:25.360 application UH in order to use the NFC chip near 0:04:25.400 --> 0:04:27.720 field communications chip that allows to have to pay on 0:04:27.720 --> 0:04:30.480 the iPhone. So now you see this consortium of payment 0:04:30.480 --> 0:04:35.120 companies through this class action lawsuit to benefit consumers. Right, 0:04:35.279 --> 0:04:38.159 that is happening now. They're upset that Apple is keeping 0:04:38.200 --> 0:04:41.159 that feature exclusive to its own service and then charging 0:04:41.160 --> 0:04:44.440 what they say are higher than normal rates for consumers 0:04:44.520 --> 0:04:46.960 to use that and those rates obviously being passed on 0:04:47.520 --> 0:04:51.360 to the payment processing companies. Okay, Mark German will keep 0:04:51.400 --> 0:04:55.560 the scoops coming. Thanks so much always for joining us. 0:05:04.480 --> 0:05:07.080 In the next couple of decades, today's Internet will undergo 0:05:07.240 --> 0:05:12.120 a multi trillion dollar transformation to an interconnected, three D 0:05:12.200 --> 0:05:15.760 virtual world currently known as the metaverse, or so some 0:05:15.839 --> 0:05:20.279 tech futurists say. Think virtual malls where we shop, play, work, 0:05:20.360 --> 0:05:23.559 and more, all under the same roof. In his new book, 0:05:23.720 --> 0:05:27.240 The Metaverse and How It Will Revolutionize Everything, a Billion 0:05:27.240 --> 0:05:30.520 Co managing partner Matthew Ball offers a glimpse into this 0:05:30.560 --> 0:05:35.000 new reality. Matthew joins us now from l A. So, Matthew, 0:05:35.080 --> 0:05:38.200 the question is, when so much of the progress that 0:05:38.200 --> 0:05:41.080 has been made on the so called metaverse so far 0:05:41.520 --> 0:05:45.200 seems to be pretty basic. When are our lives going 0:05:45.240 --> 0:05:50.240 to be quote unquote revolutionized? Well, so, we should keep 0:05:50.279 --> 0:05:53.320 in mind that these technological transformations do take decades. I'm 0:05:53.320 --> 0:05:56.240 glad that you emphasize that the first wireless cell phone 0:05:56.279 --> 0:05:58.960 call in nineteen seventy three, the first data based wireless 0:05:59.000 --> 0:06:03.840 network smartphones. Two the early two thousands we get the 0:06:03.880 --> 0:06:08.520 first consumer media services on mobile devices blackberries. Thereafter the iPhone. 0:06:09.000 --> 0:06:11.679 Some way through the next decade, most of the world 0:06:11.760 --> 0:06:15.000 was running on mobile and cloud services. What's clear now 0:06:15.120 --> 0:06:17.200 is that the advent of real time three D as 0:06:17.240 --> 0:06:20.359 we talk about it in industrial applications, the advent of 0:06:20.640 --> 0:06:24.599 x are in live patient surgery, and the fact that 0:06:24.720 --> 0:06:28.520 hundreds of millions of people, typically under the ages, are 0:06:28.560 --> 0:06:32.640 all living in three D worlds today. So not you 0:06:33.040 --> 0:06:36.520 or me yet no offense talk to us then about 0:06:36.560 --> 0:06:41.200 how this is going to change our daily lives. For example, 0:06:41.400 --> 0:06:44.479 you know you you're joining us now remotely, would it 0:06:44.480 --> 0:06:47.120 seem like you were here in the studio in this 0:06:47.200 --> 0:06:51.320 new world. That's certainly one element. We see this in 0:06:51.360 --> 0:06:54.159 particular emphasized by Meta where they talk about the idea 0:06:54.160 --> 0:06:57.520 of co location and presence in virtual space. But in 0:06:57.560 --> 0:06:59.920 some instances we will just be using some of the 0:07:00.000 --> 0:07:02.480 devices we have right now, but we might be doing 0:07:02.520 --> 0:07:06.520 those in three D what we call volumetric displays or holography. 0:07:06.720 --> 0:07:08.960 You and I might be sitting thousands of miles apart 0:07:09.080 --> 0:07:12.080 looking at a screen, but the actual presentation would be 0:07:12.120 --> 0:07:13.840 in three D. And so he showed that that has 0:07:13.880 --> 0:07:18.480 remarkable improvements on retention, engagement, non verbal forms of communication. 0:07:19.480 --> 0:07:23.080 Now you've had your metavers cy t F now going 0:07:23.280 --> 0:07:25.880 for several months, you've gotten you know, names like meta 0:07:25.920 --> 0:07:28.679 in there. Not surprising. Also Snap, which I found interesting 0:07:28.680 --> 0:07:33.200 because snaps view of the metaverse is so different from metas, 0:07:33.200 --> 0:07:36.400 where you know, Evan Spiegel has called Mark Zuckerberg's vision 0:07:36.600 --> 0:07:39.800 so hypothetical, and Snap is betting more on you know, 0:07:39.920 --> 0:07:44.880 more sort of augmented reality over real physical reality. And 0:07:44.880 --> 0:07:48.480 today Snap unveiled a new web version of Snap, which 0:07:48.480 --> 0:07:51.200 almost seems like it's going backwards. How do we square 0:07:51.280 --> 0:07:55.360 these two visions? The way that we square it is 0:07:55.400 --> 0:07:58.760 by ignoring the term altogether. It's helpful to talk about 0:07:58.760 --> 0:08:01.480 a new generation of the Internet. But you'll find that 0:08:01.560 --> 0:08:05.280 because there's no concrete definition, some believe that it fundamentally 0:08:05.320 --> 0:08:09.720 requires crypto. Others have VR centric beliefs, others have augmented 0:08:09.720 --> 0:08:13.600 reality centric. Under the classical definition, where we're talking about 0:08:13.640 --> 0:08:16.760 real time three D. All of those are likely to 0:08:16.800 --> 0:08:19.920 fit in one way, shape or form. Evan might talk 0:08:19.960 --> 0:08:24.080 about augmented reality lenses. Mark Zuckerberg might talk about a 0:08:24.280 --> 0:08:27.200 virtual world with all of your other vision cut off. 0:08:27.800 --> 0:08:30.040 That's still three D and they're still going to interconnect 0:08:30.080 --> 0:08:34.319 in some way, shape or form. Now, let's talk about 0:08:34.320 --> 0:08:37.760 how this changes the world of streaming. You know, you 0:08:37.800 --> 0:08:42.600 were a long time former Amazon Studio executive. How does 0:08:42.640 --> 0:08:44.840 this change the way we watch and what we watch 0:08:44.880 --> 0:08:48.240 and how so? This is a great example of the 0:08:48.280 --> 0:08:52.600 fact that we're already sitting in parts of this world today. Disney, 0:08:52.600 --> 0:08:56.160 of course produced most of the Mandalorian using a game engine, 0:08:56.200 --> 0:08:59.440 a real time three D simulation engine. That meant that 0:08:59.440 --> 0:09:02.240 they could create the perfect sunset. They could hold that 0:09:02.360 --> 0:09:05.920 sunset in place, they can pull out the entirety of 0:09:05.960 --> 0:09:08.680 that virtual set, we shoot it in five years, or 0:09:08.800 --> 0:09:11.760 make it available to you and I on our peloton 0:09:12.120 --> 0:09:16.240 on a video game console in virtual or augmented reality. 0:09:16.520 --> 0:09:18.000 That's one of the ways in which we're gonna start 0:09:18.040 --> 0:09:20.760 to see entertainment change. You've seen that the match CEO 0:09:20.880 --> 0:09:24.360 now comes from Zinga, and he in his new roles 0:09:24.400 --> 0:09:26.040 talking about the idea that you might be able to 0:09:26.120 --> 0:09:29.839 traps tattooing on a date rather than just play games 0:09:29.880 --> 0:09:34.160 from a smartphone. Now Netflix earnings are coming up, We've 0:09:34.160 --> 0:09:37.079 been talking a lot about the success of Stranger Things, 0:09:37.080 --> 0:09:40.240 which is not necessarily a surprise. Even though it's scarier 0:09:40.240 --> 0:09:42.600 and more gruesome than the last three seasons, I'm still 0:09:42.600 --> 0:09:45.280 watching it. Um, what would you bet is going to 0:09:45.400 --> 0:09:47.120 happen here? Do you think they're going to buck the 0:09:47.160 --> 0:09:48.920 trend that we saw earlier this year? Are we're going 0:09:48.960 --> 0:09:52.599 to see a slow degradation in the number of subscribers 0:09:52.640 --> 0:09:56.400 for a while. It's clear by all streaming benchmarks that 0:09:56.480 --> 0:10:00.880 Stranger Things season four was as exceptional as the fans 0:10:00.960 --> 0:10:04.440 hoped in excess of what Netflix did, but also third 0:10:04.440 --> 0:10:07.120 party analytics show that a lot of the subscriber editions 0:10:07.120 --> 0:10:09.840 are weaker than we would have hoped for, and in particular, 0:10:09.920 --> 0:10:13.720 churn looks worse. Antenna, a subscription analytics and data company, 0:10:14.080 --> 0:10:17.120 shows that Netflix now ranked second last in terms of 0:10:17.240 --> 0:10:21.120 subscriber retention after thirty days from sign up. They're also 0:10:21.160 --> 0:10:23.880 had a four year high for the overall services churn 0:10:23.960 --> 0:10:26.960 and retention, and so the numbers basically say that even 0:10:27.000 --> 0:10:29.440 if it was a pretty strong quarter for ads, the 0:10:29.600 --> 0:10:34.560 churn elevation is likely to offset them and more. Lord 0:10:34.559 --> 0:10:38.079 of the Rings the new series. Jeff Bezos tweeted out 0:10:38.080 --> 0:10:40.280 the trailer last week. Do you think it's gonna be 0:10:40.760 --> 0:10:43.920 a mega hit like Stranger Things has been for Netflix? 0:10:45.120 --> 0:10:48.200 Stranger Things came out in sixteen and it's still breaking 0:10:48.240 --> 0:10:52.400 records seven years later. Defining by that degree is going 0:10:52.440 --> 0:10:54.000 to take some time. But do I think that it's 0:10:54.040 --> 0:10:57.280 going to premiere to outstanding viewership globally, that it's going 0:10:57.320 --> 0:10:59.520 to cover the press, that it's going to be one 0:10:59.520 --> 0:11:02.320 of the most magnificant things that Amazon overall does in 0:11:02.360 --> 0:11:08.839 twenty two? Absolutely? So what's your take on the overall 0:11:08.880 --> 0:11:11.679 tech market dynamics. You know, we've got this negative news 0:11:11.840 --> 0:11:15.320 out from Apple that they're going to slow down spending growth, 0:11:15.360 --> 0:11:18.280 that they're going to slow down hiring. Apple you know, 0:11:18.400 --> 0:11:22.120 long considered a bell weather for consumer sentiment. Are you 0:11:22.160 --> 0:11:25.200 taking that as a signal a bad signal for the 0:11:25.200 --> 0:11:29.880 rest of big tech for the foreseeable future. It's not encouraging, 0:11:29.920 --> 0:11:34.199 certainly when you take a look at how many other creators, founders, 0:11:34.200 --> 0:11:37.920 products and services rely on the iPhone and the incremental 0:11:37.960 --> 0:11:41.920 improvements from every device refresh. None of that's good. But 0:11:42.000 --> 0:11:45.079 we're seeing this industry wide. Separate from Apple, the video 0:11:45.080 --> 0:11:48.280 game industry was down nineteen year every year last month. 0:11:48.360 --> 0:11:51.040 Year to date, it's trending at eleven year every year. 0:11:51.760 --> 0:11:56.480 And so we're looking at a broad situation where consumer electronics, entertainment, leisure, 0:11:56.840 --> 0:12:00.559 high end GPS from Nvidio are all getting rest. The 0:12:00.679 --> 0:12:03.400 drop in the crypto markets is exacerbating that on a 0:12:03.440 --> 0:12:08.000 demographic basis. All right, Matthew, always good to have you 0:12:08.080 --> 0:12:10.760 here and excited about your new book, The Metaverse and 0:12:10.760 --> 0:12:15.400 how it will revolutionize everything out tomorrow wherever you get 0:12:15.400 --> 0:12:20.280 your books, Matthew, ball of a billion, Thank you. Coming up? 0:12:20.480 --> 0:12:23.360 Could Elon Musk's bid for Twitter somehow be good for 0:12:23.400 --> 0:12:27.960 Twitter's relationship with China. Our next guest thinks so. Strategy 0:12:28.040 --> 0:12:30.800 Risks founder and CEO Isaac Stonefish is back to talk 0:12:30.840 --> 0:12:33.840 to us about the future of China US tech relations 0:12:34.200 --> 0:13:09.600 and more. This is Bloomberg, the world's biggest maker of 0:13:09.920 --> 0:13:12.960 batteries for electric cars, is considering at least two locations 0:13:13.000 --> 0:13:16.960 in Mexico for a manufacturing plan. China's Contemporary and Paris 0:13:17.040 --> 0:13:21.040 Technology could be positioning itself to help Tesla and Forward 0:13:21.600 --> 0:13:24.280 grow their eving market share in North America. The potential 0:13:24.320 --> 0:13:27.320 sites are near the Texas border, according to Bloomberg sources, 0:13:27.360 --> 0:13:29.880 and the company is planning to invest as much as 0:13:29.960 --> 0:13:35.360 five billion dollars in this project. Meantime, China is facing 0:13:35.360 --> 0:13:38.360 a slew of new challenges as its economy buckles amidst 0:13:38.360 --> 0:13:42.720 stringent COVID zero policies. There are ongoing protests at housing projects, 0:13:42.720 --> 0:13:45.880 for example, in more than fifty cities, with residents refusing 0:13:45.880 --> 0:13:49.680 to pay their mortgage payments, and typically vibrant Hong Kong 0:13:49.760 --> 0:13:53.319 is struggling to recruit and retain new talent. So how 0:13:53.320 --> 0:13:55.080 will this all impact the tech sector? I want to 0:13:55.080 --> 0:13:57.400 bring in Isaac Stonefish, the founder and CEO of Strategy 0:13:57.520 --> 0:14:00.400 Risks that works with companies to assess their risk atxposure 0:14:01.000 --> 0:14:03.360 to China, and thank you's been It's been a while, Isaac. 0:14:03.400 --> 0:14:04.839 Is so good to have you back here on the show. 0:14:05.000 --> 0:14:07.040 I mean, when you look at China right now, is 0:14:07.040 --> 0:14:09.120 it still a good place to put your money? I 0:14:09.160 --> 0:14:12.520 think it depends what better options you have, And certainly 0:14:12.600 --> 0:14:14.000 there's a lot of other places in the world, a 0:14:14.000 --> 0:14:16.480 lot of industries, a lot of other sectors that have 0:14:17.040 --> 0:14:20.400 more minimal China exposure. I think for so long people 0:14:20.400 --> 0:14:23.880 have been miss pricing the risk of investments in China, 0:14:24.080 --> 0:14:26.200 and now that the risks are so much more clear, 0:14:26.680 --> 0:14:31.840 they're able to step back and say, oops, right, is 0:14:31.880 --> 0:14:34.320 the center of gravity in the texting moving? Is it 0:14:34.440 --> 0:14:36.840 moving from you know, Beijing to Hong Kong, or from 0:14:36.840 --> 0:14:42.840 Hong Kong to Singapore for example, where conditions are more predictable. 0:14:43.480 --> 0:14:45.120 I think a lot of people in the tex Sing 0:14:45.320 --> 0:14:49.600 like the idea of it being decentralized, especially the more 0:14:49.800 --> 0:14:54.760 bitcoin e of the folks. I think the China certainly 0:14:54.920 --> 0:14:57.240 is the center of the tex sing in Asia, but 0:14:57.640 --> 0:15:00.240 it's really too early to say whether or not they 0:15:00.240 --> 0:15:02.160 can never have a global tech scene. I mean, Chinese 0:15:02.240 --> 0:15:06.360 entrepreneurs have long succeeded despite the Chinese Communist Party and 0:15:06.360 --> 0:15:09.040 despite the conditions of China as opposed to because of 0:15:09.600 --> 0:15:13.280 and as their space grows narrower and narrower, I think 0:15:13.320 --> 0:15:15.480 we are going to see more of an exodus of 0:15:15.520 --> 0:15:17.400 talent to other parts of the world. Do you think 0:15:17.600 --> 0:15:20.240 the COVID policies will have a long term impact, like 0:15:20.280 --> 0:15:22.800 will this be an inflection point. I think it definitely 0:15:22.840 --> 0:15:26.200 could be there. There's a metaphor going around China of 0:15:26.280 --> 0:15:28.360 the guy stepping on someone else's neck and a lot 0:15:28.360 --> 0:15:30.240 of people going around thinking, Okay, how do we get 0:15:30.280 --> 0:15:31.640 this guy to breathe? What can we do? What can 0:15:31.680 --> 0:15:33.880 we do? And the solution is take your foot off 0:15:33.880 --> 0:15:37.600 the neck. So it's been a long period of strangulation 0:15:37.760 --> 0:15:41.920 of China's economy. There's huge emotional damages of the cruel 0:15:42.280 --> 0:15:44.280 lockdown that they've had, and yeah, I think that will 0:15:44.280 --> 0:15:47.320 have really long term effects. Meantime, you've got companies like TikTok, 0:15:47.520 --> 0:15:52.480 for example, just continuing to thrive. And obviously you know 0:15:52.600 --> 0:15:57.000 parent company is Bite Dance. And do you think that 0:15:57.480 --> 0:15:59.880 US tech company US social media companies will ever be 0:15:59.920 --> 0:16:02.160 a to catch up. I think they will. I think 0:16:02.160 --> 0:16:05.480 they certainly might. And I think the game that TikTok 0:16:05.600 --> 0:16:08.800 is playing is how can it seem as un Chinese 0:16:08.840 --> 0:16:12.280 as possible in the United States? And the more it 0:16:12.320 --> 0:16:15.480 gets tarred with its association with the Chinese Communist Party, 0:16:15.600 --> 0:16:18.680 the better it will be for Meta and Google and 0:16:18.720 --> 0:16:23.120 Microsoft and frankly even Oracle. So you live some interesting 0:16:23.600 --> 0:16:26.800 analysis on this whole elon Musk Twitter debate, and that 0:16:26.920 --> 0:16:30.960 you think that Elon Musk's potential involvement in Twitter, or 0:16:31.040 --> 0:16:33.040 you know, the drama in general could be good for 0:16:33.080 --> 0:16:36.000 Twitter's relationship with China, which is interesting given that Twitter 0:16:36.040 --> 0:16:37.920 has been blocked in China since two thousand nine or 0:16:37.920 --> 0:16:40.360 two thousand and ten when I was living there. Um, 0:16:40.400 --> 0:16:44.000 what do you mean, Musk, For someone who's such a 0:16:44.000 --> 0:16:47.800 free speech avatar, has this massive blind spot when it 0:16:47.800 --> 0:16:52.120 comes to China and refuses to criticize China the Chinese 0:16:52.160 --> 0:16:54.960 Communist Party in a way that's especially egregious for someone 0:16:55.000 --> 0:16:58.080 who's so open and no holds barred with so many 0:16:58.080 --> 0:17:02.840 other people, And it feels like employees of Twitter will 0:17:02.920 --> 0:17:06.399 read between the lines, or we'll listen to directives that say, Okay, 0:17:06.400 --> 0:17:09.640 we don't need to be so aggressive and labeling Chinese 0:17:09.640 --> 0:17:12.120 accounts linked to state media. We don't need to push 0:17:12.119 --> 0:17:14.000 back against this kind of information, We don't need to 0:17:14.040 --> 0:17:17.880 see this as misinformation. And hey, Tesla's in China. Why 0:17:17.880 --> 0:17:20.960 can't Twitter be in China and make a lot of 0:17:20.960 --> 0:17:25.040 the ethical sacrifices that Musk has made Visa VI Tesla 0:17:25.200 --> 0:17:28.280 in China. Interesting, So you think if Elon Musk takes 0:17:28.359 --> 0:17:31.680 over Twitter and does the deal as he promised that 0:17:32.400 --> 0:17:34.240 it could be an entree for Twitter back into China. 0:17:34.400 --> 0:17:37.200 I think it certainly can be. Now, I don't think 0:17:37.200 --> 0:17:39.320 that's necessarily going to be good for Twitter's bottom line, 0:17:39.400 --> 0:17:44.600 it will certainly change the way the social media platform works. 0:17:44.720 --> 0:17:46.840 I think we see Tesla on one side, which is 0:17:46.880 --> 0:17:49.639 heavily exposed to China. We have SpaceX on the other side, 0:17:49.640 --> 0:17:52.639 which is heavily hived off from China. You have Musk 0:17:52.640 --> 0:17:55.200 and other board members linking them, and I think Twitter 0:17:55.240 --> 0:17:57.680 will fit somewhere in between. But I think it's possible 0:17:57.720 --> 0:18:00.159 that they might fit closer to the Tesla model than 0:18:00.200 --> 0:18:02.840 the SpaceX model. And how optimistic are you about the 0:18:02.840 --> 0:18:05.800 future of Tesla in China, especially given all of these 0:18:05.960 --> 0:18:10.600 broader economic concerns. I think it depends on how far 0:18:10.920 --> 0:18:14.199 Musk is willing to bend. And there's a lot of 0:18:14.240 --> 0:18:17.200 concerns in China about Tesla as a national security threat 0:18:17.200 --> 0:18:20.480 because all the data that it collects. And I assume 0:18:20.680 --> 0:18:23.960 that Musk will be very happy to continue yielding to 0:18:24.080 --> 0:18:27.960 the Chinese Communist Party with sharing data, with doing things 0:18:27.960 --> 0:18:30.800 like opening a showroom in shin Jong the region of 0:18:30.880 --> 0:18:33.040 northwest China, where upwards of a million Muslims have been 0:18:33.040 --> 0:18:36.720 in concentration camps. I think will continue to see similar behavior. 0:18:36.960 --> 0:18:39.160 I think that, frankly, the thing that would be most 0:18:39.200 --> 0:18:41.880 likely to change it if Musk decides to be more 0:18:41.920 --> 0:18:44.720 heavily involved with politics in the United States and thinks, well, 0:18:44.760 --> 0:18:46.480 this is just too much of a liability for me. 0:18:46.560 --> 0:18:48.960 But I don't see that as very likely. This along 0:18:48.960 --> 0:18:52.240 with concerns about TikTok and how TikTok handles data of 0:18:52.359 --> 0:18:54.720 its users and whether or not it's shared with the 0:18:54.840 --> 0:18:57.960 Chinese government, what's your take? No question that that it 0:18:58.000 --> 0:19:00.119 can be shared with the Chinese government, that there's no way, 0:19:00.200 --> 0:19:02.760 I think what people need to understand. And this transitions 0:19:02.800 --> 0:19:05.520 to another even darker topic. But if the US and 0:19:05.600 --> 0:19:08.960 trying to go to war over Taiwan or highlands in 0:19:09.000 --> 0:19:11.640 the East or the South Sea, or Vietnam or any 0:19:11.640 --> 0:19:16.119 other country in the region, all of Chinese companies and 0:19:16.200 --> 0:19:19.240 US companies will be viewed by some his enemy combatants. 0:19:19.320 --> 0:19:23.920 And the threat with TikTok is less. That someone's using 0:19:23.960 --> 0:19:26.359 TikTok in New Jersey and the Chinese Commuist Party is 0:19:26.400 --> 0:19:29.800 watching that in real time. But the way that that data, 0:19:29.920 --> 0:19:34.520 that information, that location tracking can be weaponized if Beijing 0:19:34.680 --> 0:19:39.360 so chooses dark. Indeed, thank you for taking us there, 0:19:39.600 --> 0:19:42.119 uh and for joining us here in the studio, Isaac 0:19:42.119 --> 0:19:45.000 Stone Fish of strateg g Risk always get to have 0:19:45.080 --> 0:19:48.040 you here. Thanks for having me. Speaking of Twitter, some 0:19:48.160 --> 0:19:52.560 headlines just crossing now about Twitter's dispute with Elon Musk, 0:19:52.640 --> 0:19:56.760 Twitter dismissing Musk's complaints that he doesn't have enough information 0:19:56.800 --> 0:20:00.240 about spam and bought accounts, Twitter saying the complaints are 0:20:00.440 --> 0:20:04.879 a irrelevant quote sideshow urging a judge to hold a 0:20:04.920 --> 0:20:09.760 trial as soon as possible over his proposed cancelation of 0:20:09.800 --> 0:20:13.840 this deal. We're expecting that hearing the first hearing in 0:20:14.280 --> 0:20:27.240 this legal saga Tuesday. Despite the major success of the 0:20:27.320 --> 0:20:30.560 latest season of Stranger Things, Netflix investors have been bracing 0:20:30.680 --> 0:20:34.119 for subscriber losses. Shares are down more than six this 0:20:34.200 --> 0:20:37.119 year as the streaming space gets more competitive and inflation 0:20:37.200 --> 0:20:41.040 is forced consumers to be more selective. But shares jump 0:20:41.119 --> 0:20:43.360 to kick off the week ahead of earnings. Bloomberg's Local 0:20:43.400 --> 0:20:45.919 show covers all things streaming for us, So why are 0:20:46.000 --> 0:20:49.040 shares climbing ahead of what's expected to be a not 0:20:49.160 --> 0:20:54.639 so great report, optimism that things will be better than expected. 0:20:54.800 --> 0:20:57.160 You know, Netflix said forecast that they would lose two 0:20:57.200 --> 0:20:59.240 million subscribers in the quarter, which would be their worst 0:20:59.280 --> 0:21:02.240 quarter ever. It would also mean that for the year 0:21:02.359 --> 0:21:04.640 they would have lost two point two million. I think 0:21:04.680 --> 0:21:09.080 there's some optimism, based on reporting and third party analysis 0:21:09.200 --> 0:21:12.960 and just the kind of obvious success of Stranger Things 0:21:13.000 --> 0:21:16.560 that maybe they'll lose five thousand or a million instead 0:21:16.600 --> 0:21:18.600 of two million. I also think that, you know, the 0:21:18.720 --> 0:21:21.320 last time around, Netflix recorded earnings and throw a lot 0:21:21.320 --> 0:21:23.800 of information at people, and they've done a better job 0:21:23.840 --> 0:21:25.800 over the last couple of months of trying to explain 0:21:25.840 --> 0:21:28.959 what some of that means. You know, there's been some 0:21:29.000 --> 0:21:32.960 talk about, you know, changing the the binge watching strategy, 0:21:33.080 --> 0:21:37.320 releasing episodes weekly for example. Do you think there's a 0:21:37.440 --> 0:21:39.360 chance that could happen, I mean, I guess Stranger Things 0:21:39.400 --> 0:21:43.320 have happened, right un intended. Yeah, they're already starting it 0:21:43.960 --> 0:21:46.800 with with the release of Stranger Things and and what 0:21:46.880 --> 0:21:49.159 Casa de Papel and Ozark. They've they've gone with this 0:21:49.320 --> 0:21:53.720 batch approach where they'll release a season in two installments, say, 0:21:53.720 --> 0:21:55.600 instead of all at once, and I think you'll see 0:21:55.600 --> 0:21:57.639 a lot more of that or maybe in in three 0:21:58.040 --> 0:22:00.000 I don't think you'll ever see Netflix or at least 0:22:00.000 --> 0:22:02.280 not anytime soon go with kind of the weekly model 0:22:02.320 --> 0:22:04.800 that's been popularized in a lot of pv But they 0:22:04.840 --> 0:22:08.040 are seeing a benefit in say, releasing four to six 0:22:08.080 --> 0:22:11.040 episodes at a time, uh and then spacing it out 0:22:11.080 --> 0:22:13.400 because it reduces the number of people who are canceling. 0:22:13.400 --> 0:22:15.280 If they know that they have the show that they like, 0:22:15.440 --> 0:22:17.639 that they're gonna need to stick with Netflix for at 0:22:17.680 --> 0:22:20.240 least two or three months. Did you know they did 0:22:20.240 --> 0:22:22.920 that with Ozark too. Has it worked? I mean, as 0:22:22.920 --> 0:22:27.280 a viewer, I found it incredibly frustrating. Well, that frustration 0:22:27.359 --> 0:22:29.440 is why they haven't done it until now, because they've 0:22:29.440 --> 0:22:31.520 conditioned all these people to just get to watch it 0:22:31.560 --> 0:22:34.199 all at once. I think what you see, based on 0:22:34.240 --> 0:22:36.680 some of the third party data at least and and 0:22:36.720 --> 0:22:39.200 on the data that Netflix puts out, is there is 0:22:39.240 --> 0:22:42.520 a secondary spike in viewership, and that seems like a 0:22:42.560 --> 0:22:44.480 good thing if your desire is to make sure that 0:22:44.480 --> 0:22:46.919 people are coming back to Netflix on a regular basis. 0:22:48.000 --> 0:22:51.000 You know, there's also some reporting about who growing more 0:22:51.040 --> 0:22:54.879 than even Disney Plus itself, and of course Disney is 0:22:54.920 --> 0:22:58.800