WEBVTT - Google Earnings and the CHIPS Act 0:00:02.240 --> 0:00:05.520 From the heart of where innovation, money and power Colli 0:00:06.320 --> 0:00:10.880 in Silicon Valley and beyond. This is Bloomberg Technology with 0:00:10.920 --> 0:00:27.080 Emily jay I. Remember we chang in San Francisco and 0:00:27.080 --> 0:00:29.200 this is Bloomberg Technology coming up for the next hour. 0:00:29.320 --> 0:00:32.720 Alphabet's earnings mostly in line with estimates a sigh of 0:00:32.760 --> 0:00:35.440 relief for those concerned about the digital ad market. But 0:00:35.600 --> 0:00:38.360 the same can't be said from Microsoft, which posted the 0:00:38.400 --> 0:00:44.920 slowest sales growth. Since we will look into these mixed results. Plus, 0:00:44.960 --> 0:00:47.640 the fifty two billion dollar Chips Act is one step 0:00:47.680 --> 0:00:51.960 closer to President Biden's desk. This means US tech companies 0:00:52.040 --> 0:00:55.360 won't have to rely so much on Taiwan, where how 0:00:55.400 --> 0:00:59.120 speaker Nancy Pelosi may visit next month Chinese government not 0:00:59.200 --> 0:01:02.000 happy about it. Will have the latest from Capitol Hill 0:01:03.360 --> 0:01:06.959 and most coordinate for cryptocurrencies. The SEC is investigating coin 0:01:07.000 --> 0:01:13.800 based over possible trading of unregistered securities, accusing a former 0:01:13.840 --> 0:01:17.039 coin based manager of insider trading just last week. We 0:01:17.120 --> 0:01:19.440 will have all the details. We'll get to all of 0:01:19.480 --> 0:01:20.679 that in a moment, but first I want to get 0:01:20.680 --> 0:01:23.440 a look at earnings. Bringing Dan Newman, analysts for the 0:01:23.520 --> 0:01:26.160 research firm future Um all right, Dan, what are your 0:01:26.200 --> 0:01:30.600 big picture takeaways? Microsoft doesn't look good. They highlighted the 0:01:30.640 --> 0:01:34.000 strong dollar, which which Google highlighted as well, though their 0:01:34.080 --> 0:01:38.760 results looking somewhat better. Yeah, I think there were narrow 0:01:38.800 --> 0:01:41.760 misses across the board, Emily. I think people have been 0:01:41.840 --> 0:01:43.560 kind of waiting to see when do we finally hit 0:01:43.600 --> 0:01:47.160 that inflection point where the beats stop. You know, the 0:01:47.200 --> 0:01:49.720 market has been selling like these companies haven't been performing 0:01:49.720 --> 0:01:51.840 for the past few quarters, and actually they have been 0:01:51.840 --> 0:01:54.520 performing quite well. Now we've got a number of factors. 0:01:54.560 --> 0:01:57.280 You've got effects, You've got the Ukraine, Russia, you've got 0:01:57.320 --> 0:02:00.400 shut downs in China, and all these were impacting Microsoft numbers. 0:02:00.440 --> 0:02:02.920 But if you look, they were pretty narrow misses on 0:02:03.040 --> 0:02:05.360 both top and bottom line. I think Microsoft said there's 0:02:05.360 --> 0:02:08.680 something like a billion dollars tied to the shutdowns that 0:02:08.760 --> 0:02:11.800 I mentioned in China, to the f X impact as 0:02:11.800 --> 0:02:14.400 well as the Ukraine Russia, and that's actually about six 0:02:14.440 --> 0:02:17.600 cents which would have taken them to hitting that EPs target. 0:02:18.040 --> 0:02:21.560 The Cloud number is still good, it's it's decelerating little 0:02:21.560 --> 0:02:24.959 bit um and you saw a dynamics through the RP, 0:02:25.600 --> 0:02:27.960 which is something I've been looking close as at enterprise software. 0:02:27.960 --> 0:02:30.160 Barring that number stayed really strong, but some of the 0:02:30.160 --> 0:02:33.240 other areas, again, it just seemed like narrow misses everywhere, 0:02:33.320 --> 0:02:36.240 Emily and so that was Microsoft, And of course what 0:02:36.280 --> 0:02:38.880 you mentioned with with Google is the ad market seemed 0:02:38.880 --> 0:02:42.120 to be stronger with Alphabet than people had expected. It 0:02:42.200 --> 0:02:45.560 has slowed, But the question is do people outside of 0:02:45.680 --> 0:02:47.600 us who are watching this every day realize we're in 0:02:47.600 --> 0:02:49.919 a recession. If you saw Prime Day, if you look 0:02:49.919 --> 0:02:51.919 at the advertising spend, it looks like people are still 0:02:51.919 --> 0:02:55.799 shopping shopping. Indeed, I just got off the phone with 0:02:55.840 --> 0:02:58.760 Alphabet CFO with poor At and she used that word 0:02:58.840 --> 0:03:02.280 uncertainty a number of times. I'm expecting to get even 0:03:02.320 --> 0:03:05.240 more color on the earnings call with so In Darperty 0:03:05.240 --> 0:03:06.959 about just what kind of uncertainty. But here she says, 0:03:07.040 --> 0:03:09.799 uncertainty is the best way to characterize what we're seeing. 0:03:10.120 --> 0:03:12.239 But the reality of the data is that it's complicated. 0:03:12.240 --> 0:03:16.000 The results reflect the lapping of significant growth last year 0:03:16.000 --> 0:03:19.000 plus uncertainty in the global economic environment. And what she 0:03:19.080 --> 0:03:21.519 talked about was that there are a variety of factors 0:03:21.560 --> 0:03:24.119 at play here, but it's really challenging to disaggregate them. 0:03:24.120 --> 0:03:26.959 So you know, they're continuing to use this word uncertainty. 0:03:27.160 --> 0:03:30.120 What do you take away from that, Well, it's the 0:03:30.160 --> 0:03:31.960 reason we're having a hard time deciding whether or not 0:03:31.960 --> 0:03:33.720 we're in recession right now. You see some of the 0:03:33.800 --> 0:03:37.200 numbers indicate that there's still strength, there's some growth across tech, 0:03:37.200 --> 0:03:39.000 because again, all these numbers are growth on a youear 0:03:39.000 --> 0:03:41.560 over your basis. So we thought at all this digital 0:03:41.640 --> 0:03:45.080 transformation acceleration, and these these numbers are better now. They're 0:03:45.120 --> 0:03:49.080 decelerated growth for both Google and for Microsoft, but they're 0:03:49.240 --> 0:03:51.000 up on a year over your basis. So people are 0:03:51.000 --> 0:03:54.200 spending more money on technology, more money on advertising than 0:03:54.240 --> 0:03:56.920 a year ago when we thought the market was growing 0:03:56.960 --> 0:04:00.000 at an explosive rate. So now we're entering this slowdown period. 0:04:00.000 --> 0:04:02.080 If you've got inflation, we've got an f X, we've 0:04:02.120 --> 0:04:04.400 got interest rate hikes. And I think some of the 0:04:04.400 --> 0:04:07.280 reason that there's some enthusiasm about these misses as we've 0:04:07.280 --> 0:04:09.480 been waiting for this, we've been waiting to see some 0:04:09.560 --> 0:04:11.880 of this FED policy, some of the monetary policy that's 0:04:11.880 --> 0:04:15.400 coming into place. Actually uh, having companies start to slow down, 0:04:15.440 --> 0:04:17.640 having guided start to slow down and say, look, some 0:04:17.720 --> 0:04:20.400 of what's happening is working. The demand is slowing, but 0:04:20.480 --> 0:04:22.920 I still lean that enterprise tech, I still lean that 0:04:23.000 --> 0:04:25.839 e commerce and platforms will be remarkably strong because we've 0:04:25.839 --> 0:04:29.200 become hyper dependent on them throughout the pandemic. I don't 0:04:29.200 --> 0:04:31.200 see that changing, and companies that are gonna want to 0:04:31.240 --> 0:04:34.600 wade their way through this slow in the economy are 0:04:34.600 --> 0:04:37.200 going to be looking to technology to help automate, to 0:04:37.279 --> 0:04:40.320 invest in AI and utilize cloud technologies to actually scale 0:04:40.320 --> 0:04:43.840 their businesses with less big overhead resources and of course 0:04:43.920 --> 0:04:46.320 slowed hiring, which means technology is gonna have to take 0:04:46.360 --> 0:04:48.359 the runt of the way now. When it came to 0:04:48.360 --> 0:04:52.599 advertising specifically, she talked about the growth driven by travel 0:04:53.040 --> 0:04:55.920 and retail, which continued to be strong. Makes sense, of course, 0:04:56.000 --> 0:04:59.200 as we are coming out hopefully, hopefully, hopefully of a pandemic, 0:04:59.480 --> 0:05:02.560 But she did talk about the pull back and she 0:05:02.680 --> 0:05:06.120 used that word pulled back by some advertisers, reflecting uncertainty 0:05:06.120 --> 0:05:08.240 about a number of factors they view as again, as 0:05:08.279 --> 0:05:11.680 I said, challenging to disaggregate. What do you make of 0:05:11.760 --> 0:05:14.360 her use of that word pulled back because everybody is wondering, 0:05:14.400 --> 0:05:16.200 is what we saw a snap in Twitter going to 0:05:16.240 --> 0:05:19.800 impact Google as well. Is Google somehow um immune to 0:05:19.839 --> 0:05:22.880 this given that it is such a broad based business 0:05:23.120 --> 0:05:28.080 or not. Well, the numbers indicate that there's clearly prioritization, 0:05:28.440 --> 0:05:32.120 and so Google seems to be above the fold. Whereas 0:05:32.160 --> 0:05:34.240 we saw what happened to Snap and what's happened to 0:05:34.279 --> 0:05:36.560 Met over the past few quarters, where there has been 0:05:36.600 --> 0:05:39.200 more pulled back, and of course ruthport I was saying, 0:05:39.240 --> 0:05:42.360 they are seeing some pullback too, but that's more deceleration 0:05:42.400 --> 0:05:47.080 than overall slowing of growth altogether. Uh, the indicators here 0:05:46.960 --> 0:05:49.000 are that companies that are going to go online still 0:05:49.040 --> 0:05:51.880 believe Google is their best bet, if not, you know, 0:05:52.000 --> 0:05:53.800 one of their best bets, and that's why we're continuing 0:05:53.839 --> 0:05:56.480 to see the spend there. I do think some companies 0:05:56.480 --> 0:05:58.680 that understand what's going on are starting to look at 0:05:58.839 --> 0:06:02.599 at you know, whether that slowing hiring, slowing addicts expense. 0:06:03.000 --> 0:06:05.080 We're seeing that across the board. We've heard the announcements 0:06:05.120 --> 0:06:07.160 from companies that are going to do less hiring, that 0:06:07.200 --> 0:06:09.600 are going to spend less on advertising, and that's part 0:06:09.640 --> 0:06:12.440 of this period of economic uncertainty and slow down. So 0:06:12.560 --> 0:06:15.400 none of this is surprising. I think smart companies understand 0:06:15.440 --> 0:06:19.000 you cannot entirely save your way to growth in the future, 0:06:19.000 --> 0:06:21.000 but you might want to slow down temporarily until we 0:06:21.040 --> 0:06:23.440 get a good handle of what's going on here. And 0:06:23.720 --> 0:06:26.520 there are so many factors, so much inconsistency in the data, 0:06:26.640 --> 0:06:28.960 and that's why, like I said, we're having a hard 0:06:28.960 --> 0:06:31.719 time making final decisions. The Feds having hard time, The 0:06:31.800 --> 0:06:34.320 markets are having hard time because we're seeing some numbers 0:06:34.320 --> 0:06:37.280 look good and some numbers look incredibly bad or at 0:06:37.320 --> 0:06:39.800 risk right now, right and maybe even Google's having a 0:06:39.800 --> 0:06:41.920 hard time, and clearly Microsoft is having a hard time. 0:06:41.960 --> 0:06:43.960 I did ask her, by the way, about competition from 0:06:44.000 --> 0:06:48.360 TikTok in particular, and they doubled down on clearly people 0:06:48.480 --> 0:06:51.760 want to consume short form videos. So she talked about 0:06:51.800 --> 0:06:54.960 YouTube shorts, and she talked about focusing on engagement and 0:06:55.000 --> 0:06:58.039 the experience and and the hope is that monetization will 0:06:58.120 --> 0:07:01.279 come later. Okay, Dan Newman, if you sure, thanks for 0:07:01.360 --> 0:07:03.880 helping us to unpack a lot of very difficult and 0:07:04.480 --> 0:07:09.880 challenging the circumstances to separate out appreciate it well. Twitter 0:07:10.000 --> 0:07:12.880 Neolon Musk are fighting about the start date for their 0:07:12.880 --> 0:07:16.560 Delaware trial. Twitter wants to begin October ten, Musque asking 0:07:16.640 --> 0:07:20.320 for October seventeen. A lawyer for Musk says the social 0:07:20.360 --> 0:07:23.960 media platform isn't producing the requested documents in a timely way. 0:07:24.240 --> 0:07:27.640 He also said Twitter is resisting turning over raw data, 0:07:27.800 --> 0:07:31.400 causing a quote log jam in the production of evidence. 0:07:31.560 --> 0:07:35.880 The defense needs coming up the Senate to vote on 0:07:35.920 --> 0:07:38.280 the All Important Chips Act, as Ali Baba pushes to 0:07:38.320 --> 0:07:41.679 list in Hong Kong amid rising tensions between the US 0:07:41.800 --> 0:07:44.800 and China. The latest from d C. Next, this is 0:07:44.800 --> 0:07:57.920 Bloomberg today the Senate advance of fifty two billion dollar 0:07:58.040 --> 0:08:00.200 bill that would bolster the U S semi can after 0:08:00.280 --> 0:08:03.040 industry setting it up for a final vote. This comes 0:08:03.040 --> 0:08:06.040 as how Speaker Nancy Pelosi seems dead said on plans 0:08:06.080 --> 0:08:09.640 to visit Taiwan next month. Beijing as warned Pelosi not 0:08:09.720 --> 0:08:12.200 to come. The Chinese government, of course, is long considered 0:08:12.240 --> 0:08:16.200 Taiwan to be part of its territory. It's also the 0:08:16.280 --> 0:08:19.600 chip capital of the world. Bloomberg Government's Emily Wilkins has 0:08:19.600 --> 0:08:22.960 the details from Capitol Hill. So a lot going on here, 0:08:23.000 --> 0:08:25.600 as always in the U S. China relationship. Emily, let's 0:08:25.600 --> 0:08:28.920 start with the Chips act. Just how close are we? So? 0:08:29.160 --> 0:08:32.199 Right now, the Senate has cleared two procedural votes, which 0:08:32.200 --> 0:08:34.360 means that all they have to do is now actually 0:08:34.400 --> 0:08:38.000 pass the legislation. They're looking at doing that tomorrow. Remember, 0:08:38.080 --> 0:08:40.400 there's a lot of Senate rules about timing and stuff 0:08:40.440 --> 0:08:43.040 that prevents them from doing it right now, But at 0:08:43.080 --> 0:08:45.679 this point, it absolutely seems like they have the votes. 0:08:45.760 --> 0:08:48.440 We've seen a lot of bipartisan support for this one, 0:08:48.679 --> 0:08:52.400 a number of Republicans joining Democrats on these votes. In fact, 0:08:52.520 --> 0:08:54.440 even though we do have a couple of Democrats who 0:08:54.480 --> 0:08:57.920 aren't here right now because they've tested positive for COVID nineteen, 0:08:58.240 --> 0:08:59.880 it still seems like this is going to have this 0:09:00.000 --> 0:09:02.160 support to clear the Senate. From there will move on 0:09:02.200 --> 0:09:04.480 to the House, where the House leaders have promised a 0:09:04.600 --> 0:09:07.120 very quick vote on This really shows that this is 0:09:07.120 --> 0:09:09.760 something that folks want to get done, especially before the 0:09:09.760 --> 0:09:12.440 House is scheduled to leave town on Friday for a 0:09:12.440 --> 0:09:16.800 long recess. Difficult to isolate, but how will this particular 0:09:16.840 --> 0:09:21.720 bill impact US China tentions? I mean, to a certain extent. 0:09:21.840 --> 0:09:24.840 This bill initially start out as something that was supposed 0:09:24.840 --> 0:09:28.360 to really bolster US competitiveness with China, and it will 0:09:28.360 --> 0:09:31.080 still do that in some regards making sure that the 0:09:31.160 --> 0:09:34.400 US is able to produce semi conductors, boasting the National 0:09:34.440 --> 0:09:38.360 Science Foundation, But it's not really the strong anti China 0:09:38.400 --> 0:09:40.640 bill that it was at the beginning. Most provisions have 0:09:40.720 --> 0:09:43.520 gotten stripped out in the interest of time and getting 0:09:43.600 --> 0:09:46.480 something done quickly. There really aren't that many days left 0:09:46.480 --> 0:09:50.559 for lawmakers to do work before the November midterm elections, 0:09:50.640 --> 0:09:53.200 and so honestly, this is probably a more China friendly 0:09:53.200 --> 0:09:55.559 bill than what we initially began to see and to 0:09:55.679 --> 0:09:58.600 start out with. But that doesn't mean that President Biden 0:09:58.679 --> 0:10:00.199 is going to have an easy fall with as a 0:10:00.360 --> 0:10:03.520 chi Jinping. Biden said he'd be speaking with the Chinese 0:10:03.520 --> 0:10:06.439 president within the next ten days, and of course, something 0:10:06.440 --> 0:10:08.559 that's going to be coming up during that call is 0:10:08.600 --> 0:10:13.360 how Speaker Nancy Pelosi's proposed trip to Taiwan. On this 0:10:13.400 --> 0:10:15.720 proposed trip to Taiwan, this would be the first of 0:10:15.760 --> 0:10:18.960 its kind in twenty five years. We've heard these warnings 0:10:19.000 --> 0:10:22.160 from the Chinese government do not come, but it seems 0:10:22.200 --> 0:10:24.720 like this trip is going to happen. What do you 0:10:24.800 --> 0:10:27.400 make of this and how this trip will impact the 0:10:27.520 --> 0:10:30.920 U S China relationship. So one notable thing is that 0:10:31.000 --> 0:10:34.040 President Buden was actually a little bit hesitant on Pelosi 0:10:34.120 --> 0:10:36.160 going on this trip. But you have heard a lot 0:10:36.160 --> 0:10:39.640 of lawmakers from her own party and from Republicans saying 0:10:39.679 --> 0:10:42.600 that Pelosi shouldn't back down to China, shouldn't back down 0:10:42.640 --> 0:10:46.160 to Beijing's concerns, and should absolutely go. You heard a 0:10:46.160 --> 0:10:49.920 Republican Senate Minority Leader, Mitch McConnell say today that Pelosi 0:10:50.000 --> 0:10:52.440 would be handing China a victory if she was to 0:10:52.480 --> 0:10:55.840 cancel her trip now, and you've heard similar support from 0:10:55.840 --> 0:10:59.520 other Democrats and Republicans. So it seems like at this point, 0:10:59.720 --> 0:11:02.640 even though the executive branch is a little bit timid 0:11:02.720 --> 0:11:05.040 about what the fallout from this trip could be, a 0:11:05.080 --> 0:11:08.319 lot of Pelosi's colleagues here in Congress are absolutely supporting 0:11:08.679 --> 0:11:12.719 uh this planned trip all right. Emily Wilkins for us 0:11:12.920 --> 0:11:16.000 at the Capital, Emily, thank you. Meantime, another twist in 0:11:16.040 --> 0:11:19.320 this story, Ali Baba will seek a primary listing in 0:11:19.480 --> 0:11:21.880 Hong Kong, paving the way for investors in China to 0:11:22.040 --> 0:11:25.520 directly buy shares of the company's most prominent e commerce 0:11:25.520 --> 0:11:28.199 company for the first time. This will also in Trench 0:11:28.240 --> 0:11:31.840 Hong Kong as an alternative to US markets. Here to 0:11:31.840 --> 0:11:36.040 discuss global lexi TS Director of Research, Pedro Palindroni. Pedro, 0:11:36.160 --> 0:11:39.040 I remember interviewing Jack mob the CEO of Ali Baba 0:11:39.080 --> 0:11:41.920 at the time, on the floor of the New York 0:11:41.920 --> 0:11:46.280 Stock Exchange, And here we are years later, Ali Baba 0:11:46.880 --> 0:11:52.680 proposing this secondary listing in Hong Kong. Why now, yeah, 0:11:52.760 --> 0:11:54.880 well thanks for having me, Emily. You know, if we 0:11:54.920 --> 0:11:58.079 step back for a second, Alibaba is essentially facing two 0:11:58.160 --> 0:12:02.360 dimensions of regulatory rest right. First, they're getting fine or 0:12:02.440 --> 0:12:07.000 punished by domestic regulators for monopolistic practices or even creating 0:12:07.120 --> 0:12:10.280 national security risk given the large amount of data that 0:12:10.360 --> 0:12:13.480 they have. Right on the second hand, there is a 0:12:13.559 --> 0:12:16.040 risk of getting the listed from the United States sometime 0:12:16.040 --> 0:12:20.600 in four because of these Holding Foreign Companies Accountable Act 0:12:21.080 --> 0:12:24.600 and the fact that it's essentially threadning to exclude Chinese 0:12:24.640 --> 0:12:29.800 companies of US exchanges unless they comply with clear auditing 0:12:29.920 --> 0:12:32.160 rules that apply to all the US listed companies. And 0:12:32.160 --> 0:12:36.040 I think this dual listing move is first and foremost 0:12:36.720 --> 0:12:39.840 a hedge against the the listing risk, but it can 0:12:39.880 --> 0:12:43.000 also help a little bit with the domestic regulatory risk. Right. So, 0:12:43.320 --> 0:12:46.479 on the the list in front, we've seen some willingness 0:12:46.520 --> 0:12:50.199 from both China and the United States to resolve the conflict. Actually, 0:12:50.440 --> 0:12:53.640 just a few months ago, the Vice Premier you He 0:12:54.120 --> 0:12:57.880 gave a speech where he expressed Chinese willingness to cooperate 0:12:57.920 --> 0:13:01.160 on this issue. However, the reality is that a smooth 0:13:01.200 --> 0:13:04.800 resolution is not a foregone conclusion just yet, and the 0:13:04.880 --> 0:13:07.640 risk of Ali Baba and the four then matter other 0:13:07.800 --> 0:13:10.840 Chinese companies of getting the listed of US exchanges in 0:13:12.040 --> 0:13:15.600 is still real. On the domestic regulatory front, I think 0:13:15.640 --> 0:13:20.040 that we've seen some positive signs lately regarding the eascene 0:13:20.080 --> 0:13:22.680 of the tech crackdown, and I think that by making 0:13:22.720 --> 0:13:26.320 this move, Ali Baba can probably win some positive favor 0:13:26.440 --> 0:13:30.440 coming up from Chinese regulators. So, you know, China clearly 0:13:30.520 --> 0:13:33.960 is hoping to preserve and build up Hong Kong status 0:13:34.000 --> 0:13:38.280 as a global financial hub. In having mainland take giants 0:13:38.320 --> 0:13:41.680 fallback onto the Hong Kong stat change is clearly in 0:13:41.720 --> 0:13:45.160 line with those goals. What do you think this means 0:13:45.160 --> 0:13:47.440 for other US listed Chinese companies? I mean, are we 0:13:47.559 --> 0:13:52.680 going to see a slew of realistics? Yeah, this is 0:13:52.679 --> 0:13:56.400 probably going to encourage the roughly two hundred U s 0:13:56.440 --> 0:13:59.720 traded Chinese A d R companies to to follow suit, 0:13:59.800 --> 0:14:02.680 right from e commerce platforms like JD dot Com or 0:14:02.720 --> 0:14:06.440 Pino Do or even China Search Changine Giant, they do 0:14:07.000 --> 0:14:10.560 Evie company Neil. You know, this move could definitely help 0:14:10.679 --> 0:14:14.840 solidify Hong Kong as as an alternative venue, and it's 0:14:14.880 --> 0:14:17.760 likely going to encourage more more activity over the next 0:14:17.760 --> 0:14:21.800 few months. So what do you see is next here 0:14:22.000 --> 0:14:26.040 in terms of Ali Baba's evolving relationship with its own government, 0:14:26.040 --> 0:14:28.520 the Chinese government, which as we know, over the last 0:14:28.560 --> 0:14:32.840 couple of years has been incredibly challenging. I think that's 0:14:32.920 --> 0:14:35.920 the one of the main reasons of these uh primary 0:14:35.960 --> 0:14:38.320 listing in Hong Kong, right, I think Ali Baba is 0:14:38.320 --> 0:14:41.800 definitely trying to work closer with the government in many regards. 0:14:42.000 --> 0:14:45.120 Were already seeing a lot of policies implemented it by 0:14:45.160 --> 0:14:49.640 Ali Baba to comply with the umbrella of common prosperity 0:14:49.680 --> 0:14:53.800 regulations in China. So I think most likely over the 0:14:53.840 --> 0:14:57.000 next few months will continue to see these large internet 0:14:57.040 --> 0:15:00.400 companies working closely with regulators to avoid all of these 0:15:00.440 --> 0:15:03.600 regulatory risks that we faced as as investors. Over the 0:15:03.640 --> 0:15:08.200 last few years. All right, Pedro Pollen Dronni Global x 0:15:08.600 --> 0:15:13.000 UH Director of Research, thank you so much for joining us. Obviously, 0:15:13.040 --> 0:15:16.360 we'll continue to follow this Ali Baba situation. Meantime, we're 0:15:16.400 --> 0:15:19.240 following new headlines coming in about Twitter. Twitter setting a 0:15:19.360 --> 0:15:23.200 date for a special shareholder vote on the proposed takeover 0:15:23.240 --> 0:15:26.040 by Elon Musk for billion dollars. Of course, we know 0:15:26.120 --> 0:15:28.760 Elon Musk is trying to get out of the deal altogether. 0:15:28.800 --> 0:15:30.800 They're fighting over the date for the trial to start, 0:15:30.800 --> 0:15:34.040 which is looking to sometime in October. But Twitter has 0:15:34.080 --> 0:15:37.000 now set the date of September for a special meeting 0:15:37.480 --> 0:15:41.400 with shareholders. Interesting, of course, given that Elon Musk doesn't 0:15:41.400 --> 0:15:43.800 want this steal to go forward at all. But we've 0:15:43.800 --> 0:15:47.080 got our eyes on September and then the trial coming 0:15:47.200 --> 0:15:59.920 up sometime in October. Now, could Walmart's surprise cut to 0:16:00.000 --> 0:16:03.400 its profit outlook signal doom for e commerce? Consumers have 0:16:03.640 --> 0:16:06.280 little to spend on discretionary goods due to the rising 0:16:06.280 --> 0:16:10.440 costs of food and and gas. Bloomers John Edwards joins 0:16:10.520 --> 0:16:12.400 us now to talk about the state of the e 0:16:12.480 --> 0:16:16.000 commerce industry, and on top of these numbers from Walmart, John, 0:16:16.120 --> 0:16:18.840 we see Shopify cutting ten thousand jobs. This is a 0:16:18.840 --> 0:16:22.200 company that's been riding high over the last couple of years. 0:16:22.480 --> 0:16:25.200 How does this all add up to you? Yeah, well, um, 0:16:25.320 --> 0:16:27.960 I mean Shopify, you know, for one thing was interesting. 0:16:28.080 --> 0:16:33.040 They made a big bet that the shift e commerce 0:16:33.040 --> 0:16:36.600 that we saw during the height of the pandemic was 0:16:36.600 --> 0:16:39.880 going to be long lasting, in fact accelerate, um, you know, 0:16:39.960 --> 0:16:44.600 faster than anybody had had expected before before COVID, and 0:16:44.920 --> 0:16:47.440 that that bet just turned out to be completely wrong. 0:16:47.680 --> 0:16:52.360 They uh, you know, thought that uh, people were not 0:16:52.520 --> 0:16:55.640 going to go back to in person shopping at the 0:16:55.680 --> 0:16:58.560 pace that they did, but people have flocked back to 0:16:58.680 --> 0:17:02.600 stores and so that led to a shop Shopify having 0:17:02.640 --> 0:17:07.439 to cut a bunch of jobs. Um yeah, what is 0:17:07.480 --> 0:17:10.280 what we're seeing here indicate about Amazon results, which we're 0:17:10.320 --> 0:17:13.800 expecting later this week. Yeah, that's gonna be really interesting 0:17:13.800 --> 0:17:16.840 to watch in light of what we heard from Walmart, 0:17:16.920 --> 0:17:19.679 because you know, what Walmart is seeing there is is 0:17:19.920 --> 0:17:23.160 not so much that uh spending overall is slowing down, 0:17:23.160 --> 0:17:25.560 but that the mix is shifting in a way that 0:17:26.240 --> 0:17:30.520 is going to cut into their margins. So people are 0:17:30.560 --> 0:17:34.439 spending you know, less on big ticket items. Less on 0:17:34.920 --> 0:17:38.760 uh you know, discretionary you know, sort of splurge items 0:17:38.840 --> 0:17:43.320 and shifting their spending to food fuel things that are 0:17:43.760 --> 0:17:46.680 you know, staples that people have to have. Uh. And 0:17:46.800 --> 0:17:51.560 so that really is where Walmart's profit warning came from. 0:17:51.600 --> 0:17:56.399 You know. In fact, they raised their expectation for revenue overall, 0:17:57.200 --> 0:17:59.959 but the mix is such that it's going to be 0:18:00.080 --> 0:18:03.560 much less profitable revenue for them. So that's definitely going 0:18:03.600 --> 0:18:07.200 to be something to watch from Amazon on on on Thursday, 0:18:07.240 --> 0:18:11.960 because uh, you know, Amazon obviously likes to sell a 0:18:11.960 --> 0:18:14.560 lot of those same big ticket items that people are 0:18:14.840 --> 0:18:18.000 starting to shy away from. Now. We were speaking about 0:18:18.000 --> 0:18:21.560 this with respect to Alphabet and Microsoft earnings earlier. I 0:18:21.600 --> 0:18:23.920 spoke with Alphabet CFO with Corad who used the word 0:18:23.920 --> 0:18:29.439 on uncertainty multiple times. We're seeing these mixed results, you know, 0:18:29.680 --> 0:18:34.359 slightly below estimate results, and it's causing some confusion about 0:18:34.359 --> 0:18:38.040 whether or not we're already in a recession. Are we 0:18:38.119 --> 0:18:40.240 according to these numbers that we're seeing from these e 0:18:40.320 --> 0:18:44.280 commerce companies? Are we? Uh, you know, it's hard to say, 0:18:44.320 --> 0:18:46.800 but I would say no for now. I think, um, 0:18:46.840 --> 0:18:51.119 you know, again, it's it's less a complete slowdown and 0:18:51.160 --> 0:18:54.320 spending and more a shift in the mix. Um, you know, 0:18:54.359 --> 0:18:58.119 and you know, high inflation is biting everyone and it 0:18:58.200 --> 0:19:00.720 and it's so it's changing the prior days that people 0:19:00.760 --> 0:19:04.320 have in terms of what they're spending on. But as 0:19:04.359 --> 0:19:09.919 we saw, you know, in the earnings from companies like McDonald's, UM, 0:19:09.920 --> 0:19:13.879 Coca Cola, PepsiCo a couple of weeks ago, Uh, people 0:19:13.960 --> 0:19:18.320 are still spending on you know, things like food going out, 0:19:18.720 --> 0:19:22.760 you know, buying soda and chips and things. So uh, 0:19:22.840 --> 0:19:25.000 you know, it's it's more of a change in the 0:19:25.040 --> 0:19:29.240 mix and less of a complete slowdown. All right, Well, 0:19:29.280 --> 0:19:31.240 the story is not over, John. We're gonna be watching 0:19:31.240 --> 0:19:33.720 those Amazon results coming out later this week. Thank you 0:19:33.800 --> 0:19:38.280 so much, Bloomberg. John Edwards, appreciate your insights there. Meantime, 0:19:38.320 --> 0:19:41.119 another story we're watching, Russia says it will opt out 0:19:41.440 --> 0:19:46.159 of the International Space Station after Russia planning to focus 0:19:46.160 --> 0:19:50.439 on building its own orbital outpost, according to its new 0:19:50.480 --> 0:19:54.040 space chief. This move coming amid tentions between Russia and 0:19:54.119 --> 0:19:56.480 the West over the war on Ukraine. Russia says it 0:19:56.480 --> 0:19:58.960 will fulfill its obligations to other partners at the space 0:19:59.000 --> 0:20:01.720 station before it leaves the project, and NASA says the 0:20:01.760 --> 0:20:04.719 I s S is scheduled to be decommissioned to crash 0:20:04.920 --> 0:20:18.040 into the Pacific Ocean anyway. By welcome back to Bloomberg Technology. 0:20:18.040 --> 0:20:20.080 I'm Emily check in San Francisco. Let's get back to 0:20:20.359 --> 0:20:22.080 our top stories of the day. I want to dig 0:20:22.119 --> 0:20:24.640 it now to the state of cybersecurity and pal Alton 0:20:24.720 --> 0:20:28.960 Network's Threat Intelligence and Security Consulting Team or unitfory too. 0:20:29.400 --> 0:20:31.479 Is that with a new report into cyber crime trends 0:20:31.480 --> 0:20:35.479 and predictions and the impact of declining economic conditions, how 0:20:35.520 --> 0:20:37.879 are these two connected. Let's ask Wendy with More, senior 0:20:37.960 --> 0:20:41.720 vice president and head of pal Alton Networks Unit forty two. 0:20:41.800 --> 0:20:45.119 So on the one hand, uh, cyber attacks, cyber threats 0:20:45.119 --> 0:20:48.120 seemed to be quieter at the moment. Why is that. 0:20:48.119 --> 0:20:50.720 That's a great question, Emily, it does seem that way. 0:20:50.880 --> 0:20:52.760 I don't know that that's actually the case. I think 0:20:52.880 --> 0:20:55.560 what's happening is that we haven't seen these mega breaches 0:20:55.600 --> 0:20:58.720 posted in the news. That's usually good news. Actually that 0:20:58.760 --> 0:21:01.200 we are not seeing as any of these massive leaks 0:21:01.200 --> 0:21:03.439 in the news. But the reality is that there is 0:21:03.440 --> 0:21:07.000 a new ransomware victim posted online with their data that 0:21:07.440 --> 0:21:11.400 are being exhorted every four hours, we see the new 0:21:11.480 --> 0:21:15.280 victims being posted on leak sites. But you are reporting 0:21:15.359 --> 0:21:18.679 there could be an uptick in cybercrime because of the 0:21:18.680 --> 0:21:21.919 deteriorating situation and the economy, And we've been reporting throughout 0:21:21.960 --> 0:21:25.080 the show more bad news, whether it's results from Alphabet 0:21:25.200 --> 0:21:29.400 or Microsoft, or Walmart or Shopify. Talk to us about 0:21:29.400 --> 0:21:33.000 how this could have all have an impact on cybercrime. Yeah, Well, 0:21:33.040 --> 0:21:35.480 what we see is that whenever there is money to 0:21:35.520 --> 0:21:38.000 be made, there are certainly criminals that are attracted to 0:21:38.080 --> 0:21:41.720 that opportunity. So in over six hundred cases a unit 0:21:41.760 --> 0:21:45.959 forty two investigated last year, we saw payment requests as 0:21:46.040 --> 0:21:49.639 high as thirty million US dollars in ransomware cases and 0:21:49.720 --> 0:21:53.800 the average is nine thousand U S dollars, So we're 0:21:53.800 --> 0:21:57.800 almost at a million dollars as an average payment. There 0:21:57.840 --> 0:21:59.879 is a tremendous amount of money to be made, and 0:22:00.040 --> 0:22:03.240 to your point, there is still a much lower barrier 0:22:03.320 --> 0:22:06.199 to entry for the criminal side than it is for 0:22:06.240 --> 0:22:10.359 the defense side. Another interesting statistic that we identified that 0:22:10.440 --> 0:22:13.480 relates to that is it the average dwell time, meaning 0:22:13.520 --> 0:22:16.280 how long an attacker is in an environment before they 0:22:16.320 --> 0:22:20.480 go unnoticed, UH is twenty eight days. That means the 0:22:20.520 --> 0:22:23.520 longer they're in an environment, the more damage that they 0:22:23.560 --> 0:22:27.120 can cause, and that damage directly translates to the more 0:22:27.200 --> 0:22:29.960