Speaker 1: From the heart of where innovation, money and power Colli
Speaker 1: in Silicon Vallet and beyond. This is Bloomberg Technology with
Speaker 1: Emily ja I remember only checking San Francisco, and this
Speaker 1: is Bloomberg Technology. Coming up. In the next hour, mid
Speaker 1: terms arrive as public trust in the election process is
Speaker 1: being upended by misinformation and hate. We're talking about how
Speaker 1: the outcome of today's vote will impact data privacy, big
Speaker 1: tech regulation, and social media. Plus, California is voting on
Speaker 1: Proposition thirty, which would tax the wealthy and fund the
Speaker 1: adoption of electric cars. Lift President will explain why his
Speaker 1: company is back in the effort despite Governor Gavin Newsom's
Speaker 1: campaign against it, while Uber is staying quiet and f
Speaker 1: T excess Sam mag Mun Freed has been snatching up
Speaker 1: crypto companies on the brink. Now he's getting bailed out
Speaker 1: by Finances c Z. We'll explain how a feud between
Speaker 1: the two founders ended in an unexpected acquisition. All that
Speaker 1: in a moment, but first I want to dig into
Speaker 1: those Disney results now and bloom bringing Bloomberg Intelligence media
Speaker 1: analyst Keith rang rang and Athan with all the details.
Speaker 1: Keether walk us through the main takeaways here. Yeah, thanks
Speaker 1: so much, Emily. So I think the main takeaways here was,
Speaker 1: you know, streaming. Everybody was a little bit worried whether
Speaker 1: they were going to be able to sustain streaming subscriber momentum,
Speaker 1: and yes they did. They came out swinging, you know,
Speaker 1: thirty percent above consensus, more than twelve million subscriber ads
Speaker 1: on Disney Plus. But I think where they really kind
Speaker 1: of fell short was on the bottom line. So we
Speaker 1: saw that streaming losses kind of came in um much
Speaker 1: higher than expected. So it's more than four billion dollars
Speaker 1: that they've lost in the director consumer segment for fiscal two.
Speaker 1: They did, however, say that those losses are going to
Speaker 1: improve going forward. This was peak losses according to them,
Speaker 1: and we should we should expect them to break even
Speaker 1: if in physical four. But for me, really the big
Speaker 1: miss was in the park segment. Uh, you know, where
Speaker 1: we were expecting them to come in with about one
Speaker 1: point nine billion dollars in operating income. They came in
Speaker 1: at about one point five. UM. Now, there's been a
Speaker 1: lot of different things. They remember Shanghai Disneyland is closed. Um,
Speaker 1: you know, we had a hurricane Ian in Florida, so
Speaker 1: There've been a couple of different things. So I think
Speaker 1: the question now is is it a demand problem or
Speaker 1: is it a cost problem? Can you compare how Disney
Speaker 1: Plus is doing. These are the Netflix, which of course,
Speaker 1: you know, suffered first subscriber loss in a decade earlier
Speaker 1: this year, but then started regaining subscribers in the latest quarter. Yes,
Speaker 1: so it's really been a tale of you know, kind
Speaker 1: of to two different worlds really here in terms of
Speaker 1: streaming subscribe mind. But remember these are two services that
Speaker 1: are very different stages in their life cycles. So so
Speaker 1: Netflix has almost a ten to twelve year head start
Speaker 1: on Disney So they're they're already kind of expanded into
Speaker 1: all those international markets, and they were kind of hitting
Speaker 1: their wall a little bit earlier this year with Disney Plus.
Speaker 1: They're still kind of really expanding into new markets. We
Speaker 1: saw them go into about hundred million homes over this
Speaker 1: summer in two and then right now they're really kind
Speaker 1: of hitting that steady cadence of content. So we've seen
Speaker 1: some really big hit series come out, whether it was
Speaker 1: an End or whether it's a she Hulk, and they're
Speaker 1: going to see much more kind of coming onto the platform,
Speaker 1: you know, once they release Black Panther of course, as
Speaker 1: well as Avatar. Those are going to come on the
Speaker 1: Disney Plus platform as well. So all of that kind
Speaker 1: of tells us that there's a lot of momentum for
Speaker 1: this company going forward. The question really has been that
Speaker 1: profitability question, and it's not just for Disney's, for all
Speaker 1: the players in the in the streaming space. Neflix Hastings
Speaker 1: has said they're looking into sports rights. How big a
Speaker 1: threat would that be to ESPN? Yes, So remember ESPN
Speaker 1: spends about nine to ten billion dollars every year on
Speaker 1: sports rights. I'm not so sure Netflix is going to
Speaker 1: be able to make that big off a pet um,
Speaker 1: you know. I think they're looking really more at, you know,
Speaker 1: maybe second tier sports. They've they've looked at a few
Speaker 1: different things. But I think one thing that they are
Speaker 1: worried about though is, you know, uh, sports rights do
Speaker 1: kind of have this huge inflationy competent attached to them.
Speaker 1: You know, they go up sixty every time new rights
Speaker 1: fees have to be renegotiated. But the one good thing
Speaker 1: that that you know, Netflix does have working in its
Speaker 1: favor is they do have now this ad supported tier
Speaker 1: and that is just perfect for sports because you have
Speaker 1: a captive of audience, advertisers will be really interested. So
Speaker 1: that if they are going after sports in a big way,
Speaker 1: I think they can still make it work. All right,
Speaker 1: Bloomberg Intelligence analyst Keith Rock and Athan, We're gonna stay
Speaker 1: tuned the headlines from the Disney call, but appreciate your
Speaker 1: insights across all of it. Meantime, Lift reported weaker than
Speaker 1: expected growth in writer leaving some investors concerned it's losing
Speaker 1: ground to Uber. This after Lift said it would cut
Speaker 1: of its workforce nearly seven hundred people in its second
Speaker 1: round of layoffs this year. For more on this, I'm
Speaker 1: joined by Lift co founder and president John Zimmer. So, look, John,
Speaker 1: share sinking revenue, falling short of expectations, fewer riders than expected.
Speaker 1: What's your response to the investor response? Here? Look, I
Speaker 1: mean we take it seriously. We can say that revenue
Speaker 1: in Q three was at an all time high for
Speaker 1: the company. We guided into Q four of adjusted IBATA
Speaker 1: at an all time high and again record revenue. Uh
Speaker 1: you know, on on specifically on riders um the same
Speaker 1: increase in active writers. Uh that uh we saw a
Speaker 1: quarter of our quarter was approximately what we saw seasonality
Speaker 1: wise in UH, so no big, big change there UM.
Speaker 1: And then in October we can say that we saw
Speaker 1: six percent month over month ride growth, which is actually
Speaker 1: faster when compared to the same period in well. And
Speaker 1: in addition to record revenue, you saw record revenue per rider.
Speaker 1: But there are real concerns that you're seating ground to Uber,
Speaker 1: are you if you look back on the quarter third
Speaker 1: party data, so it's about one percent movement. Uh. And
Speaker 1: we've actually seen share take up post quarter as we've
Speaker 1: rolled out new products for our drivers, including up front pay.
Speaker 1: It's been a narrative. You know, We've been talking about
Speaker 1: this for a decade. We've been in the business of
Speaker 1: Lift for a decade. UH. You know, people constantly asking
Speaker 1: this question of what we're doing Lift versus Uber. UH.
Speaker 1: And we've consistently over that decade UH take in market
Speaker 1: share UH and and we feel we feel comfortable where
Speaker 1: we are and with the products that we added to
Speaker 1: the market in the last few months, where we'll be
Speaker 1: in the coming quarters. We've talked about this many times
Speaker 1: over the last decade, so I appreciate you bear in
Speaker 1: with me. John. How is drivers supply relative to levels? Uber? Said?
Speaker 1: They're back. Yeah, so I can get more specific than
Speaker 1: than they're back and say that quarter over quarter, active
Speaker 1: drivers increased the most that it has in about a year.
Speaker 1: So we are seeing a return on the driver's side again.
Speaker 1: With the new products, we're seeing increased driver hours. I
Speaker 1: think there's still a bit more opportunity to go to
Speaker 1: get back to kind of pre COVID UH service levels.
Speaker 1: But we're the closest to those that we've ever been.
Speaker 1: So got to ask about Prop thirty. I went and
Speaker 1: voted on it today. Lift is a huge backer of it,
Speaker 1: this proposal to raise taxes on the wealthy to pay
Speaker 1: for electric car rebates and charging stations. That said, after
Speaker 1: you back this, Governor Gavin Newsom came out with a
Speaker 1: flurry of ads saying to vote no. What happened there?
Speaker 1: Why is list so for this, Why is the governor
Speaker 1: so against it? And do you have any regrets? Uh? No,
Speaker 1: regrets won't speak to the governor's perspective, but I can
Speaker 1: say that, you know, California has the highest some of
Speaker 1: the highs have not the highest UH or lowest air
Speaker 1: quality in the country. UH. And as you look at vehicles,
Speaker 1: electric vehicles historically policies have centered on UH, people who
Speaker 1: can afford an electric vehicle getting an incentive to buy
Speaker 1: an expensive electric vehicle. What Prop thirty does, UH is
Speaker 1: it really addresses lower income populations and make sure that
Speaker 1: they can get an electric vehicle. UM, and we think
Speaker 1: that's really important. It also puts money towards fighting wildfires. Still,
Speaker 1: the governor called it a trojan horse that puts corporate
Speaker 1: welfare above the fiscal welfare of the entire state. And
Speaker 1: Uber hasn't taken a position one way or another. I
Speaker 1: ask actually asked our Causra Shah he why a few
Speaker 1: days ago. Take a listen to what he had to say.
Speaker 1: We feel like we're making the right investments. We are,
Speaker 1: for example, lowering our own booking fee and making sure
Speaker 1: that drivers can make more on a trip basis when
Speaker 1: they move over to E vs UH, and in partnership
Speaker 1: with both public and private we think California is headed
Speaker 1: in the right direction, which is why you know we've
Speaker 1: stayed out of Prop thirty one way or the other.
Speaker 1: M John, on the face, it seems like this proposition
Speaker 1: would benefit Uber as well. Why why do you think
Speaker 1: they didn't take a stand? UM, I can't comment on
Speaker 1: why they didn't take a stand or haven't taken a
Speaker 1: stand on other important issues of our time. But I
Speaker 1: can tell you why we did again. We think it's
Speaker 1: the right thing for the entire state in terms of
Speaker 1: the environment, UH, in terms of the air quality, and
Speaker 1: in terms of allowing any driver, not not just a
Speaker 1: riot cheer driver, but any driver in the entire state
Speaker 1: to get access to a more affordable electric vehicle. So look,
Speaker 1: another question that I know I've asked you a few
Speaker 1: time over the years, but folks are asking it again.
Speaker 1: Given the recent quarter, Uber has seen success, you know,
Speaker 1: moving into food delivery, cross selling it to writers. Are
Speaker 1: you thinking about that at all? Would you consider, for example,
Speaker 1: strengthening the partnership with grub hub to potentially drive some
Speaker 1: additional revenue. We've done some B two B delivery, so
Speaker 1: not we have no plans, no interest in doing kind
Speaker 1: of a consumer delivery that that competes with their eats
Speaker 1: business or or door dash, But we do want to
Speaker 1: find opportunities for drivers that that like driving on both
Speaker 1: UH delivery as well as rideshare. That said, rideshare drivers
Speaker 1: have historically always earned more than than delivery drivers on
Speaker 1: average over the last several years. Uh And so we
Speaker 1: think our focus particularly if we do head into a
Speaker 1: recession where people typically spend less money on takeout or delivery.
Speaker 1: Uh and and where transportation is more resilient. You know,
Speaker 1: I think we're still coming off the tails of a
Speaker 1: pandemic where where that was very popular and it was
Speaker 1: helpful to have both those. I think in a recession
Speaker 1: or environment, we're comfortable and confident in focusing on consumer transportation. Meantime,
Speaker 1: the markets haven't been kind to most companies, especially tech companies.
Speaker 1: Lift now has a you know, about a four billion
Speaker 1: dollar market cap. Would you consider a sale or a
Speaker 1: merger at this point? So we're we're focused on being
Speaker 1: an independent, profitable business. Uh And we're gonna we're gonna
Speaker 1: focus on on that. Uh and and stay the course.
Speaker 1: All right, John, thank you so much for joining us.
Speaker 1: And if you were listening to that conversation you're intrigued.
Speaker 1: Make sure you vote everywhere and definitely in California. Lift
Speaker 1: co founder and president John Zimmer, thank you. Thank you. Okay,
Speaker 1: coming up, how disinformation is creating a new era of
Speaker 1: US political unrest. That's next, This is Bloomberg. Americans remain
Speaker 1: divided over the government's ability to conduct a free and
Speaker 1: fair election. A CNN poll found forty percent of voters
Speaker 1: think it is somewhat likely that elected officials will one
Speaker 1: day successfully overturn the results of a US election because
Speaker 1: their party didn't win. That issue fueled by misinformation. So
Speaker 1: how can the country progress if both sides can't even
Speaker 1: agree on the facts. Jory Craig is the head of
Speaker 1: Elections and Digital at I s D Global Group focused
Speaker 1: on finding solutions to extremism, hate, and disinformation, all major
Speaker 1: major problems. Jory, how prevalent is misinformation in the election
Speaker 1: that's happening right now? So misinformation which is misleading or
Speaker 1: confusing information shared by accident, is somewhat prevalent. But what
Speaker 1: we've seen in the months leading up to the election,
Speaker 1: really nonstuff, is disinformation, so balter, misleading information intentionally put
Speaker 1: into voters seeds to confuse them, to so doubt in advance.
Speaker 1: So when election day come, they already have these preceded
Speaker 1: false narratives in their heads and they're expecting activity to
Speaker 1: have and that will confirm those narratives for them. So
Speaker 1: how much of an impact do you think this miss
Speaker 1: and disinformation will actually have on the votes, uh, that
Speaker 1: that people decide today. So we're about to find out
Speaker 1: in the next few hours. I mean, we have already
Speaker 1: seen election officials, people running for office repeat disinformation claims.
Speaker 1: We've been seeing that in the week's leading up. We've
Speaker 1: been seating that already today. So the question will be,
Speaker 1: you know, our voters going to buy this cyclical scam
Speaker 1: that these election deniers are offering when they're repeating these
Speaker 1: lives that have really been the same lice. Um, we
Speaker 1: hope you know that voters are able to cast their
Speaker 1: ballot and there are no challenges. We've seen things be
Speaker 1: safe at the polls so far. So hopefully these election
Speaker 1: deniers and these people seating these narratives won't have their way.
Speaker 1: But we'll see. Uh. Time will tell. So there are
Speaker 1: so many conspiracy theories out there that we don't want
Speaker 1: to amplify here. But what can we regular people do
Speaker 1: to mitigate miss or disinformation? Sure, so one thing that
Speaker 1: everybody can do is slow down. We all passively scroll
Speaker 1: through our feeds, uh, and it can be easy to
Speaker 1: share something quickly without checking the source. We can all
Speaker 1: slow down. Also, people think sometimes that if they want
Speaker 1: to rebute something or say hey this is wilder, Hey
Speaker 1: this isn't true, that they should re share it, but
Speaker 1: actually they shouldn't. They shouldn't regive, you know, reshare or
Speaker 1: give more amplification to the false post. And journalists really
Speaker 1: have this bad habit to there trying to be you know,
Speaker 1: share breaking news. Uh, they can slow down and wait
Speaker 1: till all the facts are collected or just post the
Speaker 1: true information instead of resharing what's false. Also, talk to
Speaker 1: your neighbors, talk to people who don use social media
Speaker 1: regularly and help them understand that there are people out
Speaker 1: there trying to push false narratives intentionally on social media
Speaker 1: because it's a place that you go to see trusted sources,
Speaker 1: your friends, your family, etcetera. You know, one of my
Speaker 1: next questions was how can the mainstream media make this
Speaker 1: better or worse? Yes, well, I think that the mainstream
Speaker 1: media has a tough job. They're trying to provide breaking news,
Speaker 1: relevant information, but unfortunately, with how fast things move on
Speaker 1: social media, it means that often they're taking things out
Speaker 1: of context. So we've already seen we've already seen today,
Speaker 1: you know, journalists re sharing things that if they hadn't
Speaker 1: shared it those narratives would have stayed in fringe spaces,
Speaker 1: they wouldn't have been exposed to the mainstream public. So
Speaker 1: journalists have a duty to be a little bit more responsible.
Speaker 1: And remember that Twitter is not the majority of where
Speaker 1: is not a place where the majority of Americans are
Speaker 1: spending their time. Uh, And so you know, the reactions
Speaker 1: they get on Twitter are keeping up with the Twitter stream.
Speaker 1: It's not exactly uh, you know, the most responsible way
Speaker 1: to be getting information out to everybody who votes. Well,
Speaker 1: speaking of that, I'm curious what you make of Elon
Speaker 1: Musk's approach at Twitter thus far. The right of free
Speaker 1: speech is one thing. The right to algorithmic amplification a
Speaker 1: free speech is another thing. Do you like what you're
Speaker 1: saying or do you worry about the potential dangers? I
Speaker 1: worry about the potential dangers. And there's just so many,
Speaker 1: I mean, cutting resources like he did so close to
Speaker 1: the election. You know, most people are going to be
Speaker 1: thinking about content moderation because he keeps forcing this false
Speaker 1: conversation about about free speech. But that's not really even
Speaker 1: at the top of our list or even at the
Speaker 1: bottom of our list of what we worry about. We
Speaker 1: worry about how when trust and safety safety teams are cut,
Speaker 1: we don't have the staff on hand. The platforms don't
Speaker 1: have the staff on hand to respond to the threats
Speaker 1: that we're seeing, to respond to law enforcement subpoenas, to
Speaker 1: try to get the information of where someone's posting from
Speaker 1: if they're posting an active thread. Uh. The back and
Speaker 1: forth on free speech is the distraction from what we
Speaker 1: know these platforms are focused on, which is growth. Their
Speaker 1: product features are taking pieces of content and putting it
Speaker 1: into more feeds than would otherwise see it. So people
Speaker 1: who think that it's a question of free speech or
Speaker 1: censorship don't realize that their feets are already curated, those
Speaker 1: accurations already happening. They don't have a choice in what
Speaker 1: they're putting in, in what they see in their feeds.
Speaker 1: It's just not something they have already. So it's a distraction,
Speaker 1: and we're all worried about what Elon Musk is gonna do.
Speaker 1: No one really has confidence in his ability to understand
Speaker 1: how to make Twitter a safe place or even a
Speaker 1: profitable place for those who are only concerned with the
Speaker 1: money it's gonna make. So I'd say all around, it's
Speaker 1: been bad news so far. So look, these are problems
Speaker 1: that are going to persist even when the election is over.
Speaker 1: You know what happens over the next couple of weeks,
Speaker 1: how do you expect misinformation disinformation to weigh on our
Speaker 1: digestion of these results. It's going to be taxing, i'd say.
Speaker 1: I'd say that regardless of the results. We know that
Speaker 1: the bad actors who are pushing to UM deny the
Speaker 1: election results are likely to deny results in this election,
Speaker 1: and they have a long game their eyes are on,
Speaker 1: and so you can expect that whatever happens over the
Speaker 1: next two weeks will be setting up for what they
Speaker 1: want to carry into the elections, whether that's calling certain
Speaker 1: locations or certain states the most prevalent locations for allegend
Speaker 1: election fraud, whether that's denying election results, whether that's pursuing
Speaker 1: litigation UM. All of this is leading up to four
Speaker 1: where they hope to do their ultimate power grab and
Speaker 1: restore what they what they had previously. So we'll see
Speaker 1: their playbook for show in the next coming weeks, and
Speaker 1: hopefully Americans will reject this narrative and not give it
Speaker 1: more oxygen and we can all move on with the
Speaker 1: actual results. Of the election based on what Americans choose
Speaker 1: to say in this election. All right, Jerry crag Had
Speaker 1: of Elections and Digital at I S T Global, thank
Speaker 1: you so much for weighing in on all of these
Speaker 1: important issues today. Some other stories on our radar. Job
Speaker 1: cuts in the tech industry now nearing levels last seen
Speaker 1: in the early stages of the pandemic. In the last
Speaker 1: few weeks, a number of tech companies have said put
Speaker 1: hiring on hold or cut jobs outright. Think Twitter, Apple, Amazon,
Speaker 1: Alphabet Now Salesforce just today cut hundreds of workers from
Speaker 1: its sales team, and the Wall Street Journal says Facebook
Speaker 1: parent Meta is set to cut thousands of employees this week.
Speaker 1: Crypto Exchange Finance is buying rival f t X, led
Speaker 1: by Sam Bankman Free. This means billionaire Chung Pung c
Speaker 1: Z Saw, who owns Finances, crypto's richest man. It's now
Speaker 1: consolidating power in the crypto world after a bitter few
Speaker 1: between these two men, with cz actively undermining confidence in
Speaker 1: ft X is financing helping spark an exodus of users
Speaker 1: from the exchange. We're going to dive deeper into all
Speaker 1: of this in our Crypto Report later this hour. Let's
Speaker 1: get back now to the mid terms and talk about
Speaker 1: the impact the outcome of this election could have on
Speaker 1: the fate of big tech policy. I want to bring
Speaker 1: in Shoshanna Zooba for more on this. She is the
Speaker 1: author of the Age of Surveillance Capitalism and a professor
Speaker 1: emeritus at Harvard's Business School, and has so many insightful
Speaker 1: things to say on this topic. So, look, whether it's
Speaker 1: Republicans or Democrats in control after this election, how do
Speaker 1: you think the votes cast today will impact the future
Speaker 1: of the tech industry. Well, the answer to that question
Speaker 1: and really, you know what I'm gonna say, Let's zoom
Speaker 1: out a little bit and understand where we are. These
Speaker 1: midterm elections are are pretty traumatic, but they are actually
Speaker 1: one milestone in a two decade long social experiment in
Speaker 1: which we are the guinea pigs. And that social experiment
Speaker 1: began in the late nineteen nineties when our political leaders
Speaker 1: are democratically elected leaders abdicated the new digital information and
Speaker 1: communication spaces of the Internet to private companies. They told
Speaker 1: the companies you lead will get out of the way,
Speaker 1: there will be no law to constrain you. And two
Speaker 1: decades later, we are paying the price of this social experiment.
Speaker 1: You know, perhaps among the prices that we have paid
Speaker 1: is the fact that Bloomberg did very extensive analysis that
Speaker 1: found that candidates who propagated the big lie that the
Speaker 1: election was stolen from former President Trump actually got more
Speaker 1: engagement on social media, and that social media companies also
Speaker 1: profited from that engagement. What can be done about that?
Speaker 1: All right, so, but we're we're in a crazy situation.
Speaker 1: So we let the companies take over these spaces. And
Speaker 1: by the way, as everyone knows, this is the digital age.
Speaker 1: We live in an information society. Never has information been
Speaker 1: more essential to every single thing we do. And if
Speaker 1: we ourselves are not represented as information, we no longer
Speaker 1: even exist on society's atlas. It is absolutely crucial to
Speaker 1: our lives as individuals and to our democratic society. But
Speaker 1: what we have instead is avoid democracy advocated, and that
Speaker 1: left avoid where democracy should have been figuring out, hey,
Speaker 1: how do we run this Internet and how do we
Speaker 1: take advantage of the vast new digital capabilities to advance
Speaker 1: our values and prints sables to advance a democratic form
Speaker 1: of government. We never had that conversation. We left a void,
Speaker 1: and it was surveillance capitalism that filled the void. And
Speaker 1: what that means, Emily is this is not a hard
Speaker 1: luck story about technology. We're not up against technology. This
Speaker 1: is a bad story about economics because when they figured
Speaker 1: out that they could invade our spaces, our personal spaces,
Speaker 1: extract us as data, use that data to predict our behavior,
Speaker 1: and really figure out that that was going to be
Speaker 1: the new commodity business. Human data sold in process like
Speaker 1: a commodity, just as if we were selling oil barrels
Speaker 1: or tons of wheat, same deal. So they built systems
Speaker 1: for volume and speed, that's all that matter. Or get
Speaker 1: the bulk of those data flowing through the AI, flowing
Speaker 1: through the machines as much and as quickly as possible.
Speaker 1: And these are systems that simply cannot discern fact from lies.
Speaker 1: Truth has no in these systems, right, we can't even
Speaker 1: agree on what the truth is. What are you seeing
Speaker 1: in Elon Musk's approach to Twitter so far? What are
Speaker 1: your biggest concerns there? Well, my biggest concern is that
Speaker 1: we're talking about Elon Musk all the time, So you know,
Speaker 1: we've been trying to solve the problems that are that
Speaker 1: have been caused by this abdication, This sort of original,
Speaker 1: huge mistake that we made. And some of those problems
Speaker 1: are obvious to most people now, the complete loss of privacy.
Speaker 1: But another set of problems is this vast um complex
Speaker 1: of disinformation which has saturated our information spaces and taken
Speaker 1: over our politics and our lives. So when you've got
Speaker 1: a problem, you try to fix it. We've been trying
Speaker 1: to fix this problem by looking at the owners of
Speaker 1: these spaces, the Zuckerberg's and now Mr Musk, and literally
Speaker 1: on our knees pleaing with these individual men who were
Speaker 1: never elected. We never chose them to lead or to
Speaker 1: have such power over society, and yet we are reduced
Speaker 1: to begging and pleading. And that's why today every headline
Speaker 1: begins with what is Ellen going to do? Because in
Speaker 1: this in this situation right now, they have the power
Speaker 1: and we are helpless. Why are we helpless? Because our
Speaker 1: lawmakers have left us naked. We have not the rights,
Speaker 1: the laws, and the institutions that we need to keep
Speaker 1: us safe in this digital century, to keep us safe
Speaker 1: from the ruthless, profit driven machine that these companies represent,
Speaker 1: surveillance capitalism, and even to keep us safe from government surveillance.
Speaker 1: Now and I wonder, given the tumult we're seeing at Twitter,
Speaker 1: the layoffs happening at Meta, and the pivot to the metaphirst,
Speaker 1: the national security concerns around TikTok, is it possible that
Speaker 1: the social media landscape could look very different a year
Speaker 1: from now or even a few years from now. Well,
Speaker 1: the social media landscape not only can, but must look
Speaker 1: very different. I mean, right now, we're all operating in
Speaker 1: the definition of crazy. We know that begging these men
Speaker 1: to be nice to society isn't working because their systems
Speaker 1: cannot comply, and because why would they voluntarily give up
Speaker 1: profit when there are no laws to make them do so.
Speaker 1: So the first thing we have to do, Emily is
Speaker 1: pivot and stop being crazy. We need to be addressing
Speaker 1: our lawmakers. We need laws, we need legislation, we need
Speaker 1: rights to protect us. Everything has to shift to our lawmakers.
Speaker 1: It is they who gave these spaces away. They created
Speaker 1: this problem, and together citizens and lawmakers, that's how we're
Speaker 1: going to solve it. So the fact that we're um,
Speaker 1: we're wondering, you know, what is the social media landscape
Speaker 1: going to be in a year. It is we who
Speaker 1: must decide democracy that must decide, because we've got to
Speaker 1: go back to the beginning and understand that this economic
Speaker 1: paradigm that is essentially taken over the digital age is injurious,
Speaker 1: is destructive to democracy, and it's destructive to individuals our society.
Speaker 1: Is what about uh starts out, What about those who
Speaker 1: say this is free speech and letting free speech rain. Yes, yes,
Speaker 1: I'm yearning for free speech, Emily, because what we have
Speaker 1: now is, you know, we think we're talking to each other,
Speaker 1: but what's actually happening is we're doing that communicating in
Speaker 1: a private space that is privately owned by a company
Speaker 1: that is driven by a ruthless profit motive to extract
Speaker 1: more and more and more from us. And what they
Speaker 1: have learned and the research you alluded to a moment ago, Emily,
Speaker 1: is that the crazier the content, the more fringe, the
Speaker 1: more inflammatory, the more hate written, the more we start
Speaker 1: up and look just like an accident when you're running
Speaker 1: down the highway, we stop and look where mesmerized, We
Speaker 1: engage more, even it's even if it's to say I'm angry,
Speaker 1: And this is how they extract more data from us
Speaker 1: that's critical for their revenue line and on it goes,
Speaker 1: so we are not talking to one another in a
Speaker 1: free and open social situation of normal social dynamics, the
Speaker 1: kind of society that the framers of the Bill of
Speaker 1: Rights imagined when they gave us the right to free speech.
Speaker 1: They imagined a free and open space where the best
Speaker 1: ideas rise to the top. Because that's how communities proceed,
Speaker 1: that's how communities evolve. There's always gonna be crazy stuff.
Speaker 1: Crazy stuff is supposed to get born at the margin
Speaker 1: and stay at the margin. That's always gonna happen. There's
Speaker 1: free speech, but we live in a world where the
Speaker 1: crazy stuff is artificially selected, algorithmically amplified to drive profit,
Speaker 1: leaving us saturated in this world of craziness so much
Speaker 1: so that and I really want everybody to know this,
Speaker 1: we've had more disinformation with every election. We had a
Speaker 1: massive onslaught of disinformation more than ten times that in
Speaker 1: UH when we got to and in even before we
Speaker 1: got to the election. Our new head of the f
Speaker 1: d A, doctor Robert Califf Uh, through his the analysis
Speaker 1: of UH done at the f T day, f d A,
Speaker 1: was able to declare the disinformation in the year had
Speaker 1: become the primary cause of death in America. So we're
Speaker 1: talking about politics, we're talking about life and death, and
Speaker 1: we're talking about the possibility of a democratic future. Shoshana
Speaker 1: Zubov so much to talk about and never enough time, obviously.
Speaker 1: If you want to hear more of what Shoshanna has
Speaker 1: to say, check out her book, author of the Age
Speaker 1: of Surveillance Capitalism. Thank you so much for joining us.
Speaker 1: Coming up, we've got a great big guest. Coin Base
Speaker 1: CEO Brian Armstrong is on the phone. He's with us. Next,
Speaker 1: this is Bloomberg, big crypto drama over the last few days,
Speaker 1: ending with a shock after Finance agreed to acquire its
Speaker 1: most formidable rival, f t X dot com. Coin Base
Speaker 1: CEO Brian Armstrong has a few thoughts about that and more,
Speaker 1: and joins us now to give us his stake on
Speaker 1: the news. So let's zoom out a bit. First, Brian,
Speaker 1: Crazy day in the crypto markets. What happened today from
Speaker 1: your purview? Yeah, well, you know, it's hard to judge
Speaker 1: too much until all the facts are in, but it
Speaker 1: appears that ft X got into a bit of a
Speaker 1: liquidity crunch and there was some risky behavior that they
Speaker 1: were engaging in, and you know, it appears that Finance
Speaker 1: is wanting to come in here and acquire ft X,
Speaker 1: But we'll see if that deal goes through. And I
Speaker 1: think the broader story that as I think about it
Speaker 1: just zooming out, is that over the last few years, UM,
Speaker 1: you know, companies like coin Base that are pursuing a
Speaker 1: trusted and regulated approach, we've been trying to see regulatory clarity,
Speaker 1: and sometimes in the absence of that, UM, we've seen
Speaker 1: customers basically going off shore to these offshore, unregulated exchanges,
Speaker 1: and occasionally we're gonna see blow ups like this, I
Speaker 1: think unless that is resolved somehow. So this is a
Speaker 1: validation of our strategy that we've been taking for the
Speaker 1: long term. And UM, yeah, I think that's what we've
Speaker 1: been seeing. In these recent markets. There are big concerns
Speaker 1: about crypto liquidity and how fickle uh it is or isn't.
Speaker 1: How do you prevent liquidity crunches from happening? Yeah, well,
Speaker 1: in cuimmus this case, I mean, this kind of liquidity
Speaker 1: crunch is not possible to happen because, um, we're not
Speaker 1: you know, investing customer funds. Um, we're not uh, you know,
Speaker 1: doing market making or engaged in any kind of complex
Speaker 1: arrangement with other you know, parties that we own. It's
Speaker 1: very simple. You know, we're regulated as a custodian and
Speaker 1: a brokerasion in exchange. We hold all of the customer
Speaker 1: assets one to one back. So if customers want to
Speaker 1: come and withdraw those funds, even a hundred percent of them,
Speaker 1: you know, that's fine. They can withdraw all of it
Speaker 1: at once. And as a public company, our financial statements
Speaker 1: are audited and anybody can go and see them. Um.
Speaker 1: So these are the kinds of things that I think
Speaker 1: helped make us the trusted platform. And unfortunately, again in
Speaker 1: these kind of offshore, unregulated exchanges, it's a little unclear
Speaker 1: exactly how their financial statements are orchestrated and what their
Speaker 1: relationships are with these other third parties. You know, what's
Speaker 1: happening with customer funds is it being loaned out without
Speaker 1: their permission? Um. And so hopefully this is a good
Speaker 1: reminder to everybody that you know, having trusted companies in
Speaker 1: the space is what's going to help this space grow
Speaker 1: over the long term. So look, analysts are looking at
Speaker 1: this as you know, and if the deal goes through,
Speaker 1: of course, and it hasn't yet. But as a seismic
Speaker 1: shift in the competitive landscape, how are you thinking about that?
Speaker 1: Does doesn't mean you'll need to evolve your strategy at all, No,
Speaker 1: I mean I don't think our strategy changes here. So
Speaker 1: I mean, first off, we try not to look at
Speaker 1: too much of what competitors are doing. We try to
Speaker 1: just look at what our customers want and and focus
Speaker 1: on that. I also think that, by the way, you know,
Speaker 1: most of the interactions we have with our competitors in
Speaker 1: space are their operative, their friendly. We're trying to grow
Speaker 1: the whole space x and it's not so much a
Speaker 1: competitive thing most of the time. But that being said,
Speaker 1: I do think, you know, um Finance and coin bass
Speaker 1: are taking pretty different approaches and UM you know, we're
Speaker 1: we're building in a very trusted, compliant way. We're trying
Speaker 1: to go get licenses in the countries where we operate.
Speaker 1: UM you know, we're also not just a trading platform.
Speaker 1: We don't think trading the be all end all of
Speaker 1: cryptol that we have really good products in that space.
Speaker 1: We you know, the reason I got into this and
Speaker 1: I got excited about it is I want there to
Speaker 1: be a more fair and free and global financial system
Speaker 1: where there's more economic freedom, and so we're enabling people
Speaker 1: through our products to do all kinds of things with crypto,
Speaker 1: including you know, earning a living and paying for things
Speaker 1: in commerce and remittance and pure to pure payments and
Speaker 1: even accessing web three in the world of DAPs out there. So, um,
Speaker 1: we're going to continue to build towards that our strategy
Speaker 1: doesn't change. But I do think this could have an
Speaker 1: impact in terms of, um, the regulatory landscape and you
Speaker 1: know how policymakers are going to engage with different parties
Speaker 1: going forward. Would coin buys consider buying f t x
Speaker 1: U S So you know, I had a number of
Speaker 1: conversations with people over the last m twenty four hours
Speaker 1: and um, there's reasons why that would not make sense,
Speaker 1: and I'm not quite at liberty to share the details
Speaker 1: right now. I think I'm gonna let other people share
Speaker 1: that if and when they're ready, or it'll probably all
Speaker 1: come out eventually. And I think, you know, finance, I'm
Speaker 1: sure is looking at the details of this transaction as
Speaker 1: well to see, um, if it makes sense for them.
Speaker 1: But yeah, I mean, look, we're we're in a position
Speaker 1: where we really just want to focus on building our
Speaker 1: own products, and um, it may be a bad situation,
Speaker 1: um if this deal doesn't go through for the customers involved.
Speaker 1: And so I have a lot of sympathy for that, um,
Speaker 1: but it's not something where we felt we had the
Speaker 1: option to come in and acquire that would make sense
Speaker 1: for us or their customers. Well, let's talk about the customers.
Speaker 1: What's your pitch to f t X users about why
Speaker 1: they should move their funds to coin base over binance. Yeah. Well,
Speaker 1: as I mentioned at the beginning, I mean, Combus has
Speaker 1: always taken this approach over the last ten years of
Speaker 1: being the most trusted, the easiest to use out there,
Speaker 1: and we developed this suite of products over time that
Speaker 1: allows people to come to our platform and not just trade,
Speaker 1: but do all the other kinds of activity you know,
Speaker 1: staking um, if they want to participate in that, engaging
Speaker 1: in commerce web three, various things like that. And of
Speaker 1: course we serve different customer segments to we serve regular
Speaker 1: individual consumers, you know, institutional businesses and also developers. And
Speaker 1: I think the core thing is that, um, you know,
Speaker 1: there's a lot of things that would cause the customer
Speaker 1: to choose our platform, but in this exact moment in
Speaker 1: the market. I think the main thing that the top
Speaker 1: of mind for them are is going to be are
Speaker 1: my funds safe? How do I know that? Is this
Speaker 1: a transparent and regulated firm or is this something where
Speaker 1: I don't have great visibility into it? And what's my
Speaker 1: counterparty risk? Um? So those are the questions people are
Speaker 1: probably gonna be asking in this moment, and that's probably
Speaker 1: a good reason why they'd come and look at coin base.
Speaker 1: In fact, we're seeing, um, we're seeing good inflows and
Speaker 1: activity on the platform, as you can probably imagine. Oh really,
Speaker 1: you're seeing big inflows right now. Yes, we're definitely seeing
Speaker 1: increased activity on the platform there. How concerned are you
Speaker 1: that finance will have too much power over crypto if
Speaker 1: this deal goes through? Yeah? I mean so the decentralization
Speaker 1: is one of the big topics in crypto and it's
Speaker 1: kind of a core ethos, and so I definitely think
Speaker 1: there's a risk in any sense of any party having
Speaker 1: too much control. Um. You know, I don't want to
Speaker 1: speculate too much on what binuses ROLL would or would
Speaker 1: not be, but I think that's up for the market
Speaker 1: to decide, right And um, yeah, I I think that
Speaker 1: that will get worked out. I don't have any like
Speaker 1: particular thing that we need to do there, but I
Speaker 1: do think it's the top of mind thing for everyone
Speaker 1: in crypto. They don't want any one party to have
Speaker 1: too much control. On that note, then, how do you
Speaker 1: this will impact crypto regulation in d C, which, as
Speaker 1: you know, has been very much a work in progress. Yeah,
Speaker 1: so we've certainly been big advocates UM working with policymakers
Speaker 1: in d C to come to more regulatory clarity, especially
Speaker 1: around centralized exchanges and custodians and stable coins. UM. We
Speaker 1: also think that the innovation potential in defy and self
Speaker 1: custodial wallets that needs to be preserved. And I actually
Speaker 1: think by the way, those things have the ability to
Speaker 1: create an even more UM, transparent and trusted financial system
Speaker 1: going forward, because all of those things are on chain
Speaker 1: in the open, and you know, you don't have to
Speaker 1: trust a third party. You can basically trust math and
Speaker 1: code and UM and yourself to operate in those environments.
Speaker 1: So it's very important to preserve that potential. But I think,
Speaker 1: you know, one of my big fears and the thing
Speaker 1: I would caution against is that I think some people
Speaker 1: in d C may be tempted to say, hey, this
Speaker 1: is why we need more stringent regulation, and I guess
Speaker 1: my pushback to that would be these, uh, these exchanges
Speaker 1: were you know, are operating largely offshore unregulated. Um, it
Speaker 1: was not because of proposed regulation here in the US
Speaker 1: or in any other major market that the The issue
Speaker 1: here is that most of the regulators have been too
Speaker 1: focused on onshore companies that are basically trying to play
Speaker 1: by the rules, like coin Base, and that's fine to
Speaker 1: focus somewhat there, but meanwhile, the customers were going to
Speaker 1: these offshore unregulated exchanges, and um, the regulators basically we're
Speaker 1: not sanctioning that activity or preventing it from happening, and
Speaker 1: so we're seeing that risk now emerged. So I think
Speaker 1: the regulatory proposals that are in motion, like the d
Speaker 1: C S t p A bill going through Congress, these
Speaker 1: are you know, heading in the right direction. Some of
Speaker 1: the language needs to be thought more closely, especially around
Speaker 1: DE five. But if that kind of stuff comes to fruition,
Speaker 1: that'll be good. Then we just need to enforce a
Speaker 1: level playing field for the whole industry. And that's the
Speaker 1: part that that has not been happening to date. And
Speaker 1: just to give you one statistic, you know, if you
Speaker 1: look at the thought and future, is volume more than
Speaker 1: that crypto activity Trading volumes actually moved outside of the US,
Speaker 1: and I think it's largely been due to that lack
Speaker 1: of regulatory clarity. What happens if this deal doesn't go through, Brian?
Speaker 1: What then? Well, um, you know, it does appear that
Speaker 1: some customers of ft X would be taking losses and
Speaker 1: that's not a good thing for anybody. Um, And then
Speaker 1: I think the industry, you know, needs to think about
Speaker 1: how to go on from there and again seek that
Speaker 1: clear regulation, get the level playing field. It's enforced equally
Speaker 1: around the world. And um, you know, companies succeeded, companies failed.
Speaker 1: That's part of capitalism. It happens in traditional finance as well. Um,
Speaker 1: but it doesn't mean that the whole thing gets the
Speaker 1: whole traditional economy gets called into questions. So the same
Speaker 1: thing is true here in crypto. It just means we
Speaker 1: need to keep building better systems and have that regulatory
Speaker 1: clarity for the centralized actors. Sam Bank Ben Freed has
Speaker 1: been a huge political donor, big presence in Washington. Do
Speaker 1: you think he loses some credibility as a result of this.
Speaker 1: I mean, it's hard to imagine that he wouldn't. UM.
Speaker 1: I mean, that's a very difficult situation where, you know,
Speaker 1: I actually think he was very passionate and articulate. UM.
Speaker 1: In many of these meetings. He drove the conversation forward,
Speaker 1: and I give him credit for that. UM. But there's
Speaker 1: probably a lot of people in DC right now kind
Speaker 1: of scratching their their head, feeling like they got duped
Speaker 1: or deceived by this person who may have not had
Speaker 1: things exactly in order. UM. And I don't you know,
Speaker 1: I don't know exactly how that happened and how he
Speaker 1: ended up in that position, but UM, it might cause
Speaker 1: them to be a little bit more skeptical of where
Speaker 1: they're getting donations from or what the purpose of those
Speaker 1: donations are. UM. And I hope it doesn't, you know,
Speaker 1: taint their view of the crypto industry broadly. There's a
Speaker 1: lot of people out there, like myself that are in
Speaker 1: our policy team and many others, UM, you know, a
Speaker 1: sixteen z and Han Ventures and Paradigm that out there
Speaker 1: driving a lot of this regulatory and policy work. And yeah,
Speaker 1: I hope they remember that there's people working in the
Speaker 1: space that are that are here for the long term.
Speaker 1: I'm strong so of Cooin based. Thank you for making
Speaker 1: time to come speak with us today. Brian really appreciate it.
Speaker 1: Thank you, Emily, and that does it for this edition
Speaker 1: of the show. We've got a great show for you
Speaker 1: tomorrow as well. Reid Hoffman will be joining us to
Speaker 1: talk about AI in the next decade of tech innovation.
Speaker 1: Plus Elon Musk and Twitter and Gary Tan of Initialized Capital,
Speaker 1: We're gonna be talking about the future of startups in
Speaker 1: San Francisco. I'm Emily Chang in San Francisco. This is
Speaker 1: Bloomberg