WEBVTT - Twitter's Whistle-Blower and Zoom Earnings 0:00:02.240 --> 0:00:05.600 From the heart of where innovation, money and power collive 0:00:06.360 --> 0:00:10.879 in Silicon Valley and beyond. This is Bloomberg Technology with 0:00:10.960 --> 0:00:26.680 Emily Jay I'm Emily Check in San Francisco, and this 0:00:26.760 --> 0:00:29.360 is Blueberk Technology. Coming up in the next hour. Musk 0:00:29.480 --> 0:00:32.920 may have a whistleblower on his side. Twitter's former head 0:00:32.920 --> 0:00:37.160 of security has come forward alleging there are egregious deficiencies 0:00:37.240 --> 0:00:40.400 quote unquote and how the company handles personal data and 0:00:40.680 --> 0:00:43.840 doesn't even know how many bots there are. US lawmakers 0:00:43.840 --> 0:00:47.280 have vowed to investigate how this plays into the forty 0:00:47.360 --> 0:00:52.360 four billion dollar lawsuit. Plus zooms transition from an essential 0:00:52.400 --> 0:00:55.680 pandemic tool to an enterprise business juggernaut, let's take longer 0:00:55.720 --> 0:00:59.120 than expected. The company reported the lowest sales gain in 0:00:59.200 --> 0:01:04.600 its history. Zoom CFO joins us this hour, and Meta 0:01:04.959 --> 0:01:08.360 learned about the FTC's lawsuit over it's within VR acquisition 0:01:08.600 --> 0:01:11.520 via a tweet. Could this be the new norm? Under 0:01:11.600 --> 0:01:16.600 chair Lena Con Twitter's former head of security blowing the whistle. 0:01:17.120 --> 0:01:19.160 His name is Peter zach Coo, and he's filed an 0:01:19.200 --> 0:01:22.759 official complaint alleging egregious deficiencies in the way the platform 0:01:22.800 --> 0:01:27.640 handles personal data and bought accounts Twitter, refuting the claims, 0:01:27.680 --> 0:01:31.880 calling them opportunistic. How could this change Elon Musk's attempt 0:01:31.880 --> 0:01:33.720 to get out of that forty four billion dollar deal. 0:01:34.440 --> 0:01:37.360 Musks lawyers, as Katie said, have already subpeded zach COO. 0:01:37.480 --> 0:01:41.520 There's a hearing scheduled for Wednesday here to discuss Bloomberg's 0:01:41.560 --> 0:01:43.840 Jeff Feely, who covers the courts of Delaware for us, 0:01:43.880 --> 0:01:46.720 and our own Kurt Wagner, who covers Twitter. So, Kurt, 0:01:47.280 --> 0:01:50.080 who is Peter zach co and what has he claimed? Yeah, 0:01:50.240 --> 0:01:52.680 this is someone who is incredibly well respected in the 0:01:52.800 --> 0:01:57.200 security industry. He came to Twitter in late You may remember, 0:01:57.200 --> 0:01:59.680 Emily that in the summer of that year there was 0:01:59.680 --> 0:02:01.320 a big breach of the company. A bunch of very 0:02:01.400 --> 0:02:05.280 high profile accounts were hacked by a teenager and Jack Dorsey, 0:02:05.280 --> 0:02:08.239 then the CEO, you know, made a big plan to 0:02:08.360 --> 0:02:11.200 bring someone in with some real kind of reputation and 0:02:11.560 --> 0:02:14.359 stock in the industry. And so his you know, goes 0:02:14.400 --> 0:02:16.639 by Mudge is his nickname. And he was there until 0:02:16.720 --> 0:02:20.040 early this year two when he was actually fired or 0:02:20.080 --> 0:02:23.640 dismissed by CEO Prague Augerawal So very recently in the 0:02:23.680 --> 0:02:27.640 building at Twitter, so he was there very recently. Twitter 0:02:27.880 --> 0:02:31.440 responding to his claims, saying, um, this is from the 0:02:31.440 --> 0:02:34.359 CEO Parague Aggerawall, I believe you obtained this memo the 0:02:34.480 --> 0:02:37.000 reviewing the claims. But what they've seen so far is 0:02:37.040 --> 0:02:41.720 a false narrative, riddled with inconsistencies and inaccuraes, inaccuracies, and 0:02:41.800 --> 0:02:45.120 presented without important context. Give us more details on what 0:02:45.160 --> 0:02:48.200 he is claiming. Yeah, I mean he's he's essentially saying 0:02:48.240 --> 0:02:50.960 that the company has not taken the appropriate steps to 0:02:51.000 --> 0:02:54.160 protect user data. He's saying that they haven't taken appropriate 0:02:54.160 --> 0:02:58.000 steps to update you know, basic software on their data servers. Right. 0:02:58.240 --> 0:02:59.880 And the big thing, and this is the thing that 0:03:00.120 --> 0:03:02.400 you know Elon Musk is is jumping on, is that 0:03:02.440 --> 0:03:05.359 he says, well, the company doesn't actually know how many 0:03:05.400 --> 0:03:08.119 bots it has on the platform. Right. It's a little 0:03:08.160 --> 0:03:10.040 bit more nuanced than that. We can get into that, 0:03:10.120 --> 0:03:12.760 but generally, you know, when you hear that in your 0:03:12.760 --> 0:03:15.240 Elon musk your ears perked up, because this is what 0:03:15.280 --> 0:03:17.040 you have been arguing all along, is that the company 0:03:17.080 --> 0:03:19.079 doesn't actually know how many bots it has. And here 0:03:19.160 --> 0:03:21.640 is a top senior executive who reported to the CEO, 0:03:22.120 --> 0:03:25.400 essentially reaffirming what Elon has been saying. So jeaff Musk 0:03:25.480 --> 0:03:27.919 floors have already said, we want to talk to this guy. 0:03:28.160 --> 0:03:30.519 How could this potentially change the case? What's going to 0:03:30.600 --> 0:03:34.240 happen in this hearing? Well, first and foremost, let's let's 0:03:34.639 --> 0:03:37.119 stop for a second and say that it's way too 0:03:37.120 --> 0:03:40.960 early to know whether this guy's got the goods or not. Uh, 0:03:41.000 --> 0:03:44.040 you know, people are gonna have to dig in and see, 0:03:44.800 --> 0:03:48.600 you know, whether there's meat on the bone for these allegations. Now, 0:03:48.640 --> 0:03:54.480 tomorrow is not about this guy. It's about allegations that 0:03:54.600 --> 0:03:57.080 the Musk people have made that the Twitter folks are 0:03:57.640 --> 0:04:03.560 hiding witnesses specific knowledge of the spam and the body accounts, 0:04:04.240 --> 0:04:07.520 and they're offering up, you know, executives and directors who 0:04:07.560 --> 0:04:11.360 don't have specific knowledge. Judge is gonna decide whether or 0:04:11.400 --> 0:04:15.119 not Twitter has to make, you know, the people with 0:04:15.240 --> 0:04:20.120 the goods available. So, Kurt, I know you've been talking 0:04:20.160 --> 0:04:22.719 to a lot of sources. There's been some reaction from 0:04:22.720 --> 0:04:25.360 within the company. What are people saying? Yeah, I mean 0:04:25.360 --> 0:04:28.119 there's a number of current employees who can imagine aren't 0:04:28.279 --> 0:04:30.680 very thrilled right to see someone who was so recently 0:04:30.760 --> 0:04:33.920 on the staff level at the company now coming forward 0:04:33.920 --> 0:04:36.520 and making these accusations. There's been a lot of speculation 0:04:36.560 --> 0:04:38.400 as to the timing, right, I mean, we are right 0:04:38.440 --> 0:04:40.800 in the middle of this very contentious deal and suddenly 0:04:41.200 --> 0:04:44.520 this feels like a huge rapt gift for Elon Musk, 0:04:44.640 --> 0:04:47.280 So there has been speculation there as well. But you know, 0:04:47.440 --> 0:04:50.520 ultimately this just adds even more kind of chaos and 0:04:50.560 --> 0:04:53.080 confusion to what's already been a very uncertain time at 0:04:53.080 --> 0:04:56.000 a company like this. Jeff, how often does it happen that, 0:04:56.360 --> 0:04:59.640 you know, someone comes forward claiming to have, you know, 0:04:59.680 --> 0:05:03.599 this poking gun, you know, at the perfect time in 0:05:03.640 --> 0:05:07.960 a high profile business case like this. It has happened 0:05:07.960 --> 0:05:12.480 before in a case called Acorn per senius Um. So 0:05:12.520 --> 0:05:16.960 it's not unusual to have whistleblowers emerge when there's publicity 0:05:17.000 --> 0:05:19.760 about these big M and A fights, and it's just 0:05:20.320 --> 0:05:24.440 everything has been you know, drama central in this case, 0:05:24.560 --> 0:05:28.400 so it's not a bit surprising that we've had this development. 0:05:28.839 --> 0:05:30.560 So what are we what are you watching for what 0:05:30.640 --> 0:05:35.520 happens next? Well, again, we have this hearing tomorrow which 0:05:35.560 --> 0:05:38.320 will decide whether or not he gets more access to 0:05:38.360 --> 0:05:43.359 the box stuff. Going forward, we're basically keeping an eye 0:05:43.400 --> 0:05:48.280 on the process of gathering ammunition. Both sides are gathering 0:05:48.279 --> 0:05:53.320 ammunition to make their case, and we're hurtling towards October seventeen, 0:05:54.120 --> 0:05:58.440 the huge, you know, Trial of the Century in Wilmington, Delaware. 0:06:00.200 --> 0:06:02.479 You are going to be very busy that day, my friend, 0:06:02.520 --> 0:06:05.320 along with our own Kurt Wagner. Thank you both giving 0:06:05.520 --> 0:06:09.040 us rather that week I should say thank you both. 0:06:09.160 --> 0:06:12.680 Obviously you'll keep us posted on the drama, all right. 0:06:13.360 --> 0:06:17.599 Coming up, HBO gets a huge win with House of 0:06:17.640 --> 0:06:19.880 the Dragon. Just how good an omen is this for 0:06:19.920 --> 0:06:34.640 Stree Roots will discuss next. This is Bloomberg. The Game 0:06:34.640 --> 0:06:37.240 of Thrones fan club was in the house Sunday for 0:06:37.480 --> 0:06:40.840 House of the Dragon. The premier drew nine point nine 0:06:41.000 --> 0:06:44.280 million viewers on television and online, making it the best 0:06:44.400 --> 0:06:49.520 ever series debut in HBO history. It's becoming a battle 0:06:49.520 --> 0:06:52.760 of epics between HBO and Amazon, which is about debut. 0:06:52.760 --> 0:06:54.840 It's Lord of the Rings, been off, the Rings of 0:06:54.880 --> 0:06:58.600 Power joining me now, Rich Greenfield partner, I'd light shed partner. 0:06:58.640 --> 0:07:01.440 So House with the Dragon, Rich, what did you think 0:07:02.680 --> 0:07:05.840 I mean? This is sort of this is what HBO 0:07:05.960 --> 0:07:10.440 does best. I mean, big, epic, super expensive, tens of 0:07:10.480 --> 0:07:13.559 millions of dollars in episode. But this is the bread 0:07:13.600 --> 0:07:16.520 and butter of HBO, and I think the the big 0:07:16.600 --> 0:07:19.840 question for investors is going to be how does this 0:07:20.000 --> 0:07:22.680 evolve over the course of the next twelve months. Obviously, 0:07:22.680 --> 0:07:26.520 as you know, Emily Warner Media was acquired by Discovery. 0:07:26.680 --> 0:07:29.840 Essentially the companies came together into a merger, and at 0:07:29.880 --> 0:07:32.679 some point next summer, Discovery Plus is going to basically 0:07:32.760 --> 0:07:37.040 be you know, matched together with HBO Max, probably still 0:07:37.080 --> 0:07:41.080 called HBO Max, and we're gonna see sort of how 0:07:41.120 --> 0:07:44.680 those two brands come together into one service. But I 0:07:44.720 --> 0:07:47.760 think when you look at something like House of of 0:07:48.120 --> 0:07:51.640 the Dragon, this is this is everything that HBO is 0:07:51.760 --> 0:07:55.760 known for over the last twenty years, you know, incredibly 0:07:56.320 --> 0:08:01.000 well produced, high end premium content. Well, we're already seeing 0:08:01.000 --> 0:08:04.480 some of those growing pains as this, uh, you know, 0:08:04.600 --> 0:08:09.440 Discovery tries to merge these two cultures. What's your expectations 0:08:09.520 --> 0:08:13.000 about how it's all going to play out. I mean, look, 0:08:13.200 --> 0:08:16.000 you've got a company, you know. The reality is for 0:08:16.080 --> 0:08:20.640 Discovery this was a stay, right, I mean, Discovery did 0:08:20.680 --> 0:08:23.160 not have a future as a standalone company, they were 0:08:23.240 --> 0:08:25.840 going to be in deep trouble just being in the 0:08:25.960 --> 0:08:30.960 cable network world, especially in the nonfiction sort of that 0:08:31.040 --> 0:08:33.600 world was not going to look pretty over the course 0:08:33.640 --> 0:08:35.720 of the next five to ten years. And I don't 0:08:35.720 --> 0:08:38.959 think anyone really believed in the future of Discovery Plus. 0:08:39.480 --> 0:08:41.680 And so because A. T and T needed to get 0:08:41.720 --> 0:08:44.920 out of the Warner Media business, it sort of is this, 0:08:45.120 --> 0:08:47.800 you know, you really unique opportunity for sort of a 0:08:47.880 --> 0:08:51.000 kicksay for John Malone and David Zas left to sort 0:08:51.040 --> 0:08:53.560 of wind up being in control of one of the 0:08:53.559 --> 0:08:56.600 world's largest media companies. The negative is they have a 0:08:56.600 --> 0:08:58.840 lot of debt, and so that's why you're seeing sort 0:08:58.880 --> 0:09:00.800 of a lot of cost cutting in a lot of 0:09:00.960 --> 0:09:04.160 sort of retrenchment strategically. But I think the question is 0:09:04.200 --> 0:09:06.360 going to be this is an incredible group of assets, 0:09:06.880 --> 0:09:10.040 and how much of their focus is on building for 0:09:10.080 --> 0:09:12.920 the future. There's no doubt in my mind that the 0:09:12.960 --> 0:09:15.680 future of television is going to be streamed, right like 0:09:15.800 --> 0:09:20.120 linear key V is dying, and so how does Warner Media, 0:09:20.200 --> 0:09:23.240 which still has a tremendous amount of cable network you know, 0:09:23.280 --> 0:09:28.200 broadcast cable network assets, how do they transform that into 0:09:28.240 --> 0:09:31.439 the future and can they do it with that much debtload. 0:09:31.760 --> 0:09:34.400 Obviously you're seeing a lot of investors who are skeptical 0:09:34.800 --> 0:09:38.920 of their prospects so far. Does the successive House of 0:09:39.000 --> 0:09:42.320 the Dragon bode well for Amazon's Lord of the Rings 0:09:42.400 --> 0:09:45.600 project and all the money and time that they spent 0:09:45.720 --> 0:09:47.920 on it, well, I think it's it's funny that you 0:09:47.960 --> 0:09:51.120 bring up Lord of the Rings because it's actually a 0:09:51.160 --> 0:09:55.079 great example of the different strategy that you're now seeing 0:09:55.600 --> 0:09:59.280 at Warner Media or sorry, Warner Brothers Discovery, I should say, 0:09:59.559 --> 0:10:02.559 versus the old management team. Because if you go today, Emily, 0:10:02.640 --> 0:10:05.040 if any of the viewers who are watching this turn 0:10:05.120 --> 0:10:09.440 on Amazon's you know, Prime Video, they can actually watch 0:10:09.880 --> 0:10:12.240 all of the original Lord of the Rings. Now you'd say, 0:10:12.280 --> 0:10:14.880 the original Lord of the Rings, those are Warner Brothers. 0:10:14.920 --> 0:10:18.000 Those should be on HBO Max, and they're on HBO Max. 0:10:18.200 --> 0:10:22.200 But they're now also on Amazon's Prime Video. So you 0:10:22.240 --> 0:10:26.760 see this culture now that's really changing inside of Warner Media, 0:10:26.800 --> 0:10:29.880 where instead of making it the exclusive home of content, 0:10:30.320 --> 0:10:33.720 they're really going back to more of a licensing model 0:10:33.760 --> 0:10:36.360 where sure it's on HBO Max, but now you can 0:10:36.360 --> 0:10:39.880 also get it on Amazon Prime, whereas that never would 0:10:39.880 --> 0:10:42.680 have happened under the prior management team. You're seeing a 0:10:42.720 --> 0:10:47.520 real focus on licensing to generate profits versus the only 0:10:47.679 --> 0:10:52.120 court of sort of north Star was streaming, meaning HBO Max. 0:10:52.679 --> 0:10:55.600 HBO Max is no longer the sole focus of Warner 0:10:55.600 --> 0:10:59.360 Brothers Discovery. They're looking to make money anyway possible, including 0:10:59.440 --> 0:11:03.760 licensing the third parties like Amazon. We're also seeing these 0:11:03.800 --> 0:11:08.040 streamers make more moves into sports. News today that Amazon 0:11:08.120 --> 0:11:10.240 is going to show its Thursday night football and bars 0:11:10.240 --> 0:11:13.800 and restaurants as part of a it's deal with direct TV, 0:11:14.240 --> 0:11:16.200 and you know you talked about, you know, for the 0:11:16.240 --> 0:11:18.920 first time ever, they're being more viewers on streaming than 0:11:19.679 --> 0:11:23.400 on cable. Is sports really the only way to take 0:11:23.440 --> 0:11:26.000 these stream moves to the next level, to that next 0:11:26.040 --> 0:11:30.240 generation or chapter of growth. Well, E sports is a 0:11:30.320 --> 0:11:34.760 great way to get people to come in, right If 0:11:34.920 --> 0:11:38.040 you have Champions League, which is what Paramount Plus just acquired, 0:11:38.120 --> 0:11:40.320 it's the only way you can watch Champions League as 0:11:40.320 --> 0:11:42.480 you've got to sign up for Paramount Plus. If you 0:11:42.520 --> 0:11:45.880 want to watch ww e's WrestleMania, you have to have Peacock. 0:11:46.440 --> 0:11:49.560 You know, if you you know each of these platforms 0:11:49.760 --> 0:11:53.120 is buying exclusive sports rights. Now that the negative is 0:11:53.200 --> 0:11:55.720 obviously you can't. You don't own these you don't own 0:11:55.760 --> 0:11:59.280 the content. You have to keep fighting every three five said, 0:11:59.360 --> 0:12:01.640 whatever the year as are, you have to keep fighting 0:12:01.640 --> 0:12:03.400 for this content because you don't own it the way 0:12:03.400 --> 0:12:06.199 you own a piece of content. You know, Netflix own 0:12:06.320 --> 0:12:10.000 stranger things forever, like it's not disappearing. They don't have 0:12:10.040 --> 0:12:12.440 to go rebid for those rights in three years. So 0:12:12.800 --> 0:12:15.320 sports is a really a double edged sword. But I 0:12:15.360 --> 0:12:18.200 think what's interesting, Emily is it's the last thing that's 0:12:18.200 --> 0:12:21.360 been holding the bundle together. Like right now, you can't 0:12:21.480 --> 0:12:26.040 name an entertainment show on traditional television that anyone cares about. 0:12:26.320 --> 0:12:29.280 The only thing that's sort of holding the sport there, 0:12:29.320 --> 0:12:33.360 the traditional multi channel video bundle together has been sports. 0:12:33.400 --> 0:12:37.520 And even now sports are finally starting to move to streaming. 0:12:37.760 --> 0:12:40.160 And I think that's why you've seen a record piece 0:12:40.600 --> 0:12:44.240 of chord cutting seven eight percent. Now cord cutting is 0:12:44.280 --> 0:12:47.160 becoming a real problem for all of these legacy media 0:12:47.240 --> 0:12:50.880 companies because they've moved so much great content, including sports, 0:12:50.920 --> 0:12:53.280 to streaming, and the tech companies are coming in and 0:12:53.280 --> 0:12:55.320 bidding on these sports rights. You know, we think the 0:12:55.360 --> 0:12:57.480 big next thing you're gonna see in the next four weeks, 0:12:57.760 --> 0:13:00.720 we believe Apple is gonna buy Sunday Ticket, which has 0:13:00.760 --> 0:13:03.040 been on Direct TV for years. We think that moves 0:13:03.040 --> 0:13:06.920 over to Apple. And so you're seeing real massive seismic 0:13:07.040 --> 0:13:10.840 change that is going to have big problems for anybody 0:13:10.960 --> 0:13:15.520 in the cable network business. Now. I know you're a 0:13:15.559 --> 0:13:18.960 prolific Twitter and we were speaking earlier about this whistleblower 0:13:19.000 --> 0:13:21.760 that's come forward that could potentially give Elon Musk and 0:13:21.920 --> 0:13:25.040 Edge and this battle Royale to get out of that 0:13:25.640 --> 0:13:31.320 billion dollar deal to buy Twitter. What's your take. You know, 0:13:31.920 --> 0:13:37.960 it comes down to essentially one fundamental issue is did 0:13:38.120 --> 0:13:42.640 Twitter falsified it's public files? Because the deal that Alan 0:13:42.840 --> 0:13:46.800 Must agreed to didn't talk about bots or the percentage 0:13:46.800 --> 0:13:49.640 of bots or any of that. It basically just relied 0:13:49.720 --> 0:13:52.760 on the validity of Twitter's public filings. And if you 0:13:52.800 --> 0:13:55.679 read Twitter's public filings, it says, you know, we make 0:13:55.720 --> 0:13:57.960 a lot of assumptions in how we look at the 0:13:58.040 --> 0:14:00.720 bot number. We think it's under five percent, but we 0:14:00.840 --> 0:14:05.240 could be wrong if Twitter knowingly knew the number was 0:14:05.600 --> 0:14:09.920 far larger than five and every one of Twitter's filings 0:14:10.040 --> 0:14:14.720 was essentially fraudulent because they were basically filing fraudulent documents 0:14:14.720 --> 0:14:17.560 with the SEC. Then Musk has a case. Now, I 0:14:17.600 --> 0:14:19.760 find it hard to believe that Jack Dorsey and Ned 0:14:19.800 --> 0:14:22.920 Siegel and sort of the entire management team at Twitter 0:14:23.280 --> 0:14:28.400 has willfully for years been filing false SEC documents. It's 0:14:28.400 --> 0:14:33.240 obviously possible. I think it's unlikely unless those documents, Unless 0:14:33.240 --> 0:14:37.560 those filings with the SEC are knowingly false. Twitter has 0:14:37.600 --> 0:14:40.280 already said they could have bad mistakes and how they 0:14:40.360 --> 0:14:43.640 did this. It's that this is not an exact science. 0:14:44.000 --> 0:14:48.120 If that's the case, Ellen will be paying fifty right. 0:14:48.400 --> 0:14:50.360 And to be clear, we're talking about the number of 0:14:50.480 --> 0:14:55.680 bots that advertisers that that that actually see advertising that 0:14:55.720 --> 0:14:57.440 are counted at m a is not the number of 0:14:57.440 --> 0:15:01.520 bots overall. Um, that's what they're referring to with that 0:15:01.800 --> 0:15:05.560 five percent less than five percent number. Correct. It's there 0:15:05.600 --> 0:15:07.840 are certainly good bots that are part of Twitter that 0:15:07.880 --> 0:15:10.040 you actually would want there. But in terms of sort 0:15:10.080 --> 0:15:16.000 of the spami part that shouldn't be counted as actually um, 0:15:16.040 --> 0:15:19.320 you know, monetize able d a uses Twitter calls them 0:15:19.480 --> 0:15:21.720 m d a us is actually the term Twitter uses 0:15:22.600 --> 0:15:26.080 they have said repeatedly that the percentage of bots on 0:15:26.080 --> 0:15:30.520 a quarterly basis is sub five percent based on their analysis, 0:15:30.560 --> 0:15:33.520 but that analysis could be flawed. You would have to 0:15:33.520 --> 0:15:36.640 believe that they knowingly knew, I mean, they factually knew 0:15:36.640 --> 0:15:40.880 the number was north of five and chose to do 0:15:41.240 --> 0:15:45.120 different disclosure in the SEC filings. That's the only way 0:15:45.280 --> 0:15:50.240 must gets out of paying right right, okay? Which Queenfield 0:15:50.440 --> 0:15:53.320 Hid Partners to have you here, Rich, Thank you for 0:15:53.360 --> 0:16:04.680 stopping by. Zoom was the pandemic's golden child, but that 0:16:04.720 --> 0:16:07.880 transition from an essential covid Ara tool to an enterprise 0:16:08.120 --> 0:16:12.160 business platform may not happen as quickly as some expected. 0:16:12.240 --> 0:16:14.120 Let's talk about all that and more. Was Zoom. CFO 0:16:14.600 --> 0:16:17.240 Kelly Steckelberg here, Kelly. Great to have you back with us. 0:16:17.280 --> 0:16:19.360 So let's talk about the good news and the less 0:16:19.400 --> 0:16:23.560 good news. Obviously, you're you're seeing growth from enterprise customers, 0:16:23.560 --> 0:16:28.000 but you're losing consumers and small businesses. Let's start there. When, 0:16:28.440 --> 0:16:33.280 how and where do you expect that to stabilize? So 0:16:33.680 --> 0:16:36.440 great to see you, Emily, Thank you. Um. As you mentioned, 0:16:36.440 --> 0:16:39.320 we're really pleased with the performance in the enterprise, which 0:16:39.320 --> 0:16:43.240 grew year over year. We can talk about zoom Phone 0:16:43.240 --> 0:16:45.920 and the very strong performance there, but in our online 0:16:45.920 --> 0:16:48.840 segment of the business, as you mentioned, there certainly were 0:16:48.840 --> 0:16:52.240 some headwinds, a lot of it due to strengthen the dollar, 0:16:52.520 --> 0:16:54.800 as well as impact that we're seeing from the war 0:16:55.160 --> 0:16:59.680 in Europe, but also just slower acquisition of new customers 0:16:59.680 --> 0:17:01.720 at the top of the funnel, which is having impact 0:17:01.760 --> 0:17:04.600 as people are moving around the world again and going 0:17:04.640 --> 0:17:06.800 out to happy hour with their friends rather than doing 0:17:06.800 --> 0:17:11.480 that over zoom and slowing sales growth among corporate customers. 0:17:11.600 --> 0:17:13.760 Is that a sign of slowing corporate demand? Is that 0:17:14.119 --> 0:17:18.359 because of the macro economic issues we're seeing. So we 0:17:18.480 --> 0:17:22.520 had a very strong quarter from an enterprise perspective. Our 0:17:23.119 --> 0:17:26.080 overall bookings came in stronger than we expected and revenue 0:17:26.080 --> 0:17:29.600 at now we are starting to see our enterprise sales 0:17:29.600 --> 0:17:34.320 cycles moving towards more normalized enterprise cycles, which meant they 0:17:34.320 --> 0:17:36.359 were a little bit more back end loaded in the quarter. 0:17:36.840 --> 0:17:40.000 That led to higher than expected deferred revenue, though just 0:17:40.160 --> 0:17:44.080 a little bit less contribution to revenue in the quarter itself. 0:17:44.560 --> 0:17:48.240 But zoom Phone was very strong performance. We crossed over 0:17:48.280 --> 0:17:51.720 that four million seat mark in August we're excited to 0:17:51.800 --> 0:17:55.080 talk about We had two record deals with seat size 0:17:55.119 --> 0:17:58.320 of greater than hundred and we're seeing strength in some 0:17:58.359 --> 0:18:01.399 of our new products, including Zoom Contact Center and Zoom 0:18:01.400 --> 0:18:05.480 i ke for sales. Bigger picture, there's this narrative that 0:18:05.840 --> 0:18:09.600 the pendulum swinging back to the office, Apple calling workers 0:18:09.600 --> 0:18:12.520 back to the office next month. Employees are pushing back, yes, 0:18:13.680 --> 0:18:16.280 but you know this is still the policy at least 0:18:16.320 --> 0:18:19.000 as of now. I know. Zoom did its own survey 0:18:19.000 --> 0:18:22.320 on hybrid work. You found that executives still want that 0:18:22.400 --> 0:18:25.520 hybrid work environment. How are you adding all of this 0:18:25.840 --> 0:18:28.800 up and trying to figure out how this will translate 0:18:28.840 --> 0:18:33.000 into demand. Yeah. So the great thing about Zoom technology 0:18:33.200 --> 0:18:36.480 is it enables work both at home and in the office, 0:18:36.520 --> 0:18:40.560 and they're both really important. So we see organizations recognizing 0:18:40.600 --> 0:18:42.760 that they need to maintain their Zoom licenses for their 0:18:42.760 --> 0:18:45.879 employees that are working at home, but also our technology 0:18:46.000 --> 0:18:51.080 like Zoom rooms, smart gallery workplace reservations allow them to 0:18:51.200 --> 0:18:53.960 then interact with those employees that are in the office 0:18:54.080 --> 0:18:57.360 in a very inclusive way. And so having the right 0:18:57.359 --> 0:19:00.000 technology in your conference room is becoming more and more 0:19:00.040 --> 0:19:03.919 important every single day. We've all come used to seeing 0:19:04.000 --> 0:19:07.679 everybody's face on a square, and so technology like smart 0:19:07.720 --> 0:19:10.320 gallery enables that even if you're the one like me 0:19:10.520 --> 0:19:13.240 who I've moved out of the state of California sitting 0:19:13.280 --> 0:19:16.399 in Texas, sees everybody that's in that room and feels 0:19:16.440 --> 0:19:20.680 really included in that conversation. And so we're excited about 0:19:20.680 --> 0:19:23.600 the prospects of hybrid work and Zoom technology is there 0:19:23.640 --> 0:19:26.840 to support it. So just about thirty seconds left, Kelly, 0:19:27.000 --> 0:19:29.639 what is the next year of gross look like to you? 0:19:29.680 --> 0:19:32.880 Where does most of that growth come from? Quickly? So, 0:19:33.080 --> 0:19:35.800 certainly it's going to come from our enterprise segment, and 0:19:35.840 --> 0:19:38.119 we are also focused on lots of new initiatives in 0:19:38.160 --> 0:19:41.960 the online segment that will drive it first to being 0:19:42.000 --> 0:19:45.959 flat but eventually a growth driver as well. All Right, 0:19:46.080 --> 0:19:49.520 Kelly Stuckelberg's CFO of Zoom. Always good to have you here. Kelly, 0:19:49.640 --> 0:20:00.600 thank you for stopping by. Well, come back to Bloomer 0:20:00.640 --> 0:20:04.480 Technology and Emily Changese San Francisco. The FTC is breaking 0:20:04.520 --> 0:20:07.200 with tradition and it's clamped down on big tech. Meta 0:20:07.280 --> 0:20:09.520 says it learned that the Federal Trade Commission was suing 0:20:09.560 --> 0:20:14.280 the company over it's within virtual reality acquisition via a tweet. 0:20:14.840 --> 0:20:17.320 The FTC typically gives companies a chance to meet with 0:20:17.359 --> 0:20:20.840 commissioners and argue their case before filing a lawsuit. Here 0:20:20.880 --> 0:20:24.280 to explain what happened, our very own Alex Brenka what 0:20:24.440 --> 0:20:30.080 happened indeed, Alex Yeah, Meta executives and lawyers apparently found 0:20:30.119 --> 0:20:33.760 out from this tweet that the FTC was suing them 0:20:34.040 --> 0:20:36.280 in kind of an unusual case that I'm sure we 0:20:36.280 --> 0:20:38.520 can kind of talk about in a second. Basically, what 0:20:38.680 --> 0:20:41.320 typically happens in these situations is of the deals large 0:20:41.440 --> 0:20:44.520 enough UM, they have to file documents to the FTC, 0:20:44.680 --> 0:20:47.520 which our sources told us they did they felt hundreds 0:20:47.560 --> 0:20:50.840 of documents and data points, and then if a suit 0:20:51.160 --> 0:20:54.800 is imminent, usually there are depositions before that happens. No 0:20:54.960 --> 0:20:58.720 depositions happened in this case, UM, and the company was 0:20:58.760 --> 0:21:01.359 alerted to this via tweet. I will say the FTC 0:21:01.720 --> 0:21:03.880 initially didn't comment on this story. They did get back 0:21:03.880 --> 0:21:06.840 to us today saying that they followed typical practice by 0:21:06.880 --> 0:21:10.040 notifying the company after the fact. That being said, our 0:21:10.080 --> 0:21:14.000 sources say this was unusual to not have any inkling 0:21:14.400 --> 0:21:17.280 UM that they would be coming for them to sue 0:21:17.320 --> 0:21:20.800 to block this virtual reality deal. What is this signal 0:21:20.920 --> 0:21:27.320 about the FTCs approach on future cases. Yeah, it's a 0:21:27.359 --> 0:21:30.560 bit of a different approach now under m Chairperson Lena 0:21:30.640 --> 0:21:34.960 con You'll remember Cohn is a a Biden appointee M 0:21:35.119 --> 0:21:37.879 who was basically brought into the agency that is meant 0:21:37.920 --> 0:21:42.080 to enforce anti trust laws, and she's taken a pretty 0:21:42.119 --> 0:21:45.880 aggressive approach. This suit in and of itself, UM makes 0:21:45.960 --> 0:21:49.080 kind of a little used argument um called the nascent 0:21:49.160 --> 0:21:52.760 competition claim that basically means that they are suing to 0:21:52.800 --> 0:21:56.080 block this deal on the future potential of this small 0:21:56.119 --> 0:21:59.680 and growing industry. UM. And they've alleged that Meta is 0:21:59.760 --> 0:22:03.920 a position of the of Within and its apps Supernatural 0:22:04.280 --> 0:22:07.480 can actually camp down competition because it doesn't give the 0:22:07.480 --> 0:22:10.600 tech giant the opportunity to use its resources to create 0:22:10.640 --> 0:22:13.840 more competition in this space. So a lot of unique 0:22:13.880 --> 0:22:17.680 things happening with this case, for sure, but it all 0:22:17.720 --> 0:22:21.560 alludes to this kind of more aggressive posturing up Kahn 0:22:22.000 --> 0:22:26.200 and the Democratic Commissioners on the FTC against big tech companies. 0:22:27.160 --> 0:22:31.360 I spoke with Congressman David Ceellini yesterday and asked him 0:22:31.400 --> 0:22:36.040 about Lena Kahan and her approach and this lawsuit in particular. 0:22:36.160 --> 0:22:38.480 Some critics have said this is such a small company, 0:22:38.480 --> 0:22:42.120 wise the FTC bothering with bothering with this. Of course, 0:22:42.200 --> 0:22:45.840 Meta has said the deal would increase competition. Take a 0:22:45.880 --> 0:22:50.080 listen to what Representative Cellini had to say. I don't 0:22:50.119 --> 0:22:52.680 think we can take any representation made by Meadow or 0:22:52.720 --> 0:22:56.719 Facebook remark Zuckerberg seriously, time and time again, they've been 0:22:56.720 --> 0:23:01.520 found to be engaging in anti competitive behaviors. M He 0:23:01.560 --> 0:23:04.480 went on to argue how much Meta and Facebook in 0:23:04.560 --> 0:23:09.679 particular are anti competitive, and how supportive he is of 0:23:10.080 --> 0:23:14.560 Lena Khan's approach. You know, of course that's just one lawmaker. 0:23:14.680 --> 0:23:16.480 But what do we know about the support that Lena 0:23:16.520 --> 0:23:20.800 Khan has in Congress to continue? You know, you'll remember 0:23:20.840 --> 0:23:24.240 the House came out with a report basically pointing out 0:23:24.240 --> 0:23:27.920 that Meta alone had acquired more than a hundred smaller 0:23:27.960 --> 0:23:30.960 companies in the decades prior. And this within case is 0:23:31.040 --> 0:23:34.520 the only time the FTC has actually sued preemptively to 0:23:34.600 --> 0:23:37.720 stop one of those deals. For folks like Cecilina, No, 0:23:37.840 --> 0:23:41.040 they might be looking at things like the ongoing back 0:23:41.040 --> 0:23:44.639 and forth that Meta still has regarding the Instagram and 0:23:44.720 --> 0:23:48.320 what'sapp acquisitions UM. That issue is also with the FTC 0:23:48.400 --> 0:23:52.320 from Lena cons predecessor UM. So I think that folks 0:23:52.359 --> 0:23:55.639