Speaker 1: From the heart of where innovation, money and power collive
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay I'm Emily Check in San Francisco, and this
Speaker 1: is Blueberk Technology. Coming up in the next hour. Musk
Speaker 1: may have a whistleblower on his side. Twitter's former head
Speaker 1: of security has come forward alleging there are egregious deficiencies
Speaker 1: quote unquote and how the company handles personal data and
Speaker 1: doesn't even know how many bots there are. US lawmakers
Speaker 1: have vowed to investigate how this plays into the forty
Speaker 1: four billion dollar lawsuit. Plus zooms transition from an essential
Speaker 1: pandemic tool to an enterprise business juggernaut, let's take longer
Speaker 1: than expected. The company reported the lowest sales gain in
Speaker 1: its history. Zoom CFO joins us this hour, and Meta
Speaker 1: learned about the FTC's lawsuit over it's within VR acquisition
Speaker 1: via a tweet. Could this be the new norm? Under
Speaker 1: chair Lena Con Twitter's former head of security blowing the whistle.
Speaker 1: His name is Peter zach Coo, and he's filed an
Speaker 1: official complaint alleging egregious deficiencies in the way the platform
Speaker 1: handles personal data and bought accounts Twitter, refuting the claims,
Speaker 1: calling them opportunistic. How could this change Elon Musk's attempt
Speaker 1: to get out of that forty four billion dollar deal.
Speaker 1: Musks lawyers, as Katie said, have already subpeded zach COO.
Speaker 1: There's a hearing scheduled for Wednesday here to discuss Bloomberg's
Speaker 1: Jeff Feely, who covers the courts of Delaware for us,
Speaker 1: and our own Kurt Wagner, who covers Twitter. So, Kurt,
Speaker 1: who is Peter zach co and what has he claimed? Yeah,
Speaker 1: this is someone who is incredibly well respected in the
Speaker 1: security industry. He came to Twitter in late You may remember,
Speaker 1: Emily that in the summer of that year there was
Speaker 1: a big breach of the company. A bunch of very
Speaker 1: high profile accounts were hacked by a teenager and Jack Dorsey,
Speaker 1: then the CEO, you know, made a big plan to
Speaker 1: bring someone in with some real kind of reputation and
Speaker 1: stock in the industry. And so his you know, goes
Speaker 1: by Mudge is his nickname. And he was there until
Speaker 1: early this year two when he was actually fired or
Speaker 1: dismissed by CEO Prague Augerawal So very recently in the
Speaker 1: building at Twitter, so he was there very recently. Twitter
Speaker 1: responding to his claims, saying, um, this is from the
Speaker 1: CEO Parague Aggerawall, I believe you obtained this memo the
Speaker 1: reviewing the claims. But what they've seen so far is
Speaker 1: a false narrative, riddled with inconsistencies and inaccuraes, inaccuracies, and
Speaker 1: presented without important context. Give us more details on what
Speaker 1: he is claiming. Yeah, I mean he's he's essentially saying
Speaker 1: that the company has not taken the appropriate steps to
Speaker 1: protect user data. He's saying that they haven't taken appropriate
Speaker 1: steps to update you know, basic software on their data servers. Right.
Speaker 1: And the big thing, and this is the thing that
Speaker 1: you know Elon Musk is is jumping on, is that
Speaker 1: he says, well, the company doesn't actually know how many
Speaker 1: bots it has on the platform. Right. It's a little
Speaker 1: bit more nuanced than that. We can get into that,
Speaker 1: but generally, you know, when you hear that in your
Speaker 1: Elon musk your ears perked up, because this is what
Speaker 1: you have been arguing all along, is that the company
Speaker 1: doesn't actually know how many bots it has. And here
Speaker 1: is a top senior executive who reported to the CEO,
Speaker 1: essentially reaffirming what Elon has been saying. So jeaff Musk
Speaker 1: floors have already said, we want to talk to this guy.
Speaker 1: How could this potentially change the case? What's going to
Speaker 1: happen in this hearing? Well, first and foremost, let's let's
Speaker 1: stop for a second and say that it's way too
Speaker 1: early to know whether this guy's got the goods or not. Uh,
Speaker 1: you know, people are gonna have to dig in and see,
Speaker 1: you know, whether there's meat on the bone for these allegations. Now,
Speaker 1: tomorrow is not about this guy. It's about allegations that
Speaker 1: the Musk people have made that the Twitter folks are
Speaker 1: hiding witnesses specific knowledge of the spam and the body accounts,
Speaker 1: and they're offering up, you know, executives and directors who
Speaker 1: don't have specific knowledge. Judge is gonna decide whether or
Speaker 1: not Twitter has to make, you know, the people with
Speaker 1: the goods available. So, Kurt, I know you've been talking
Speaker 1: to a lot of sources. There's been some reaction from
Speaker 1: within the company. What are people saying? Yeah, I mean
Speaker 1: there's a number of current employees who can imagine aren't
Speaker 1: very thrilled right to see someone who was so recently
Speaker 1: on the staff level at the company now coming forward
Speaker 1: and making these accusations. There's been a lot of speculation
Speaker 1: as to the timing, right, I mean, we are right
Speaker 1: in the middle of this very contentious deal and suddenly
Speaker 1: this feels like a huge rapt gift for Elon Musk,
Speaker 1: So there has been speculation there as well. But you know,
Speaker 1: ultimately this just adds even more kind of chaos and
Speaker 1: confusion to what's already been a very uncertain time at
Speaker 1: a company like this. Jeff, how often does it happen that,
Speaker 1: you know, someone comes forward claiming to have, you know,
Speaker 1: this poking gun, you know, at the perfect time in
Speaker 1: a high profile business case like this. It has happened
Speaker 1: before in a case called Acorn per senius Um. So
Speaker 1: it's not unusual to have whistleblowers emerge when there's publicity
Speaker 1: about these big M and A fights, and it's just
Speaker 1: everything has been you know, drama central in this case,
Speaker 1: so it's not a bit surprising that we've had this development.
Speaker 1: So what are we what are you watching for what
Speaker 1: happens next? Well, again, we have this hearing tomorrow which
Speaker 1: will decide whether or not he gets more access to
Speaker 1: the box stuff. Going forward, we're basically keeping an eye
Speaker 1: on the process of gathering ammunition. Both sides are gathering
Speaker 1: ammunition to make their case, and we're hurtling towards October seventeen,
Speaker 1: the huge, you know, Trial of the Century in Wilmington, Delaware.
Speaker 1: You are going to be very busy that day, my friend,
Speaker 1: along with our own Kurt Wagner. Thank you both giving
Speaker 1: us rather that week I should say thank you both.
Speaker 1: Obviously you'll keep us posted on the drama, all right.
Speaker 1: Coming up, HBO gets a huge win with House of
Speaker 1: the Dragon. Just how good an omen is this for
Speaker 1: Stree Roots will discuss next. This is Bloomberg. The Game
Speaker 1: of Thrones fan club was in the house Sunday for
Speaker 1: House of the Dragon. The premier drew nine point nine
Speaker 1: million viewers on television and online, making it the best
Speaker 1: ever series debut in HBO history. It's becoming a battle
Speaker 1: of epics between HBO and Amazon, which is about debut.
Speaker 1: It's Lord of the Rings, been off, the Rings of
Speaker 1: Power joining me now, Rich Greenfield partner, I'd light shed partner.
Speaker 1: So House with the Dragon, Rich, what did you think
Speaker 1: I mean? This is sort of this is what HBO
Speaker 1: does best. I mean, big, epic, super expensive, tens of
Speaker 1: millions of dollars in episode. But this is the bread
Speaker 1: and butter of HBO, and I think the the big
Speaker 1: question for investors is going to be how does this
Speaker 1: evolve over the course of the next twelve months. Obviously,
Speaker 1: as you know, Emily Warner Media was acquired by Discovery.
Speaker 1: Essentially the companies came together into a merger, and at
Speaker 1: some point next summer, Discovery Plus is going to basically
Speaker 1: be you know, matched together with HBO Max, probably still
Speaker 1: called HBO Max, and we're gonna see sort of how
Speaker 1: those two brands come together into one service. But I
Speaker 1: think when you look at something like House of of
Speaker 1: the Dragon, this is this is everything that HBO is
Speaker 1: known for over the last twenty years, you know, incredibly
Speaker 1: well produced, high end premium content. Well, we're already seeing
Speaker 1: some of those growing pains as this, uh, you know,
Speaker 1: Discovery tries to merge these two cultures. What's your expectations
Speaker 1: about how it's all going to play out. I mean, look,
Speaker 1: you've got a company, you know. The reality is for
Speaker 1: Discovery this was a stay, right, I mean, Discovery did
Speaker 1: not have a future as a standalone company, they were
Speaker 1: going to be in deep trouble just being in the
Speaker 1: cable network world, especially in the nonfiction sort of that
Speaker 1: world was not going to look pretty over the course
Speaker 1: of the next five to ten years. And I don't
Speaker 1: think anyone really believed in the future of Discovery Plus.
Speaker 1: And so because A. T and T needed to get
Speaker 1: out of the Warner Media business, it sort of is this,
Speaker 1: you know, you really unique opportunity for sort of a
Speaker 1: kicksay for John Malone and David Zas left to sort
Speaker 1: of wind up being in control of one of the
Speaker 1: world's largest media companies. The negative is they have a
Speaker 1: lot of debt, and so that's why you're seeing sort
Speaker 1: of a lot of cost cutting in a lot of
Speaker 1: sort of retrenchment strategically. But I think the question is
Speaker 1: going to be this is an incredible group of assets,
Speaker 1: and how much of their focus is on building for
Speaker 1: the future. There's no doubt in my mind that the
Speaker 1: future of television is going to be streamed, right like
Speaker 1: linear key V is dying, and so how does Warner Media,
Speaker 1: which still has a tremendous amount of cable network you know,
Speaker 1: broadcast cable network assets, how do they transform that into
Speaker 1: the future and can they do it with that much debtload.
Speaker 1: Obviously you're seeing a lot of investors who are skeptical
Speaker 1: of their prospects so far. Does the successive House of
Speaker 1: the Dragon bode well for Amazon's Lord of the Rings
Speaker 1: project and all the money and time that they spent
Speaker 1: on it, well, I think it's it's funny that you
Speaker 1: bring up Lord of the Rings because it's actually a
Speaker 1: great example of the different strategy that you're now seeing
Speaker 1: at Warner Media or sorry, Warner Brothers Discovery, I should say,
Speaker 1: versus the old management team. Because if you go today, Emily,
Speaker 1: if any of the viewers who are watching this turn
Speaker 1: on Amazon's you know, Prime Video, they can actually watch
Speaker 1: all of the original Lord of the Rings. Now you'd say,
Speaker 1: the original Lord of the Rings, those are Warner Brothers.
Speaker 1: Those should be on HBO Max, and they're on HBO Max.
Speaker 1: But they're now also on Amazon's Prime Video. So you
Speaker 1: see this culture now that's really changing inside of Warner Media,
Speaker 1: where instead of making it the exclusive home of content,
Speaker 1: they're really going back to more of a licensing model
Speaker 1: where sure it's on HBO Max, but now you can
Speaker 1: also get it on Amazon Prime, whereas that never would
Speaker 1: have happened under the prior management team. You're seeing a
Speaker 1: real focus on licensing to generate profits versus the only
Speaker 1: court of sort of north Star was streaming, meaning HBO Max.
Speaker 1: HBO Max is no longer the sole focus of Warner
Speaker 1: Brothers Discovery. They're looking to make money anyway possible, including
Speaker 1: licensing the third parties like Amazon. We're also seeing these
Speaker 1: streamers make more moves into sports. News today that Amazon
Speaker 1: is going to show its Thursday night football and bars
Speaker 1: and restaurants as part of a it's deal with direct TV,
Speaker 1: and you know you talked about, you know, for the
Speaker 1: first time ever, they're being more viewers on streaming than
Speaker 1: on cable. Is sports really the only way to take
Speaker 1: these stream moves to the next level, to that next
Speaker 1: generation or chapter of growth. Well, E sports is a
Speaker 1: great way to get people to come in, right If
Speaker 1: you have Champions League, which is what Paramount Plus just acquired,
Speaker 1: it's the only way you can watch Champions League as
Speaker 1: you've got to sign up for Paramount Plus. If you
Speaker 1: want to watch ww e's WrestleMania, you have to have Peacock.
Speaker 1: You know, if you you know each of these platforms
Speaker 1: is buying exclusive sports rights. Now that the negative is
Speaker 1: obviously you can't. You don't own these you don't own
Speaker 1: the content. You have to keep fighting every three five said,
Speaker 1: whatever the year as are, you have to keep fighting
Speaker 1: for this content because you don't own it the way
Speaker 1: you own a piece of content. You know, Netflix own
Speaker 1: stranger things forever, like it's not disappearing. They don't have
Speaker 1: to go rebid for those rights in three years. So
Speaker 1: sports is a really a double edged sword. But I
Speaker 1: think what's interesting, Emily is it's the last thing that's
Speaker 1: been holding the bundle together. Like right now, you can't
Speaker 1: name an entertainment show on traditional television that anyone cares about.
Speaker 1: The only thing that's sort of holding the sport there,
Speaker 1: the traditional multi channel video bundle together has been sports.
Speaker 1: And even now sports are finally starting to move to streaming.
Speaker 1: And I think that's why you've seen a record piece
Speaker 1: of chord cutting seven eight percent. Now cord cutting is
Speaker 1: becoming a real problem for all of these legacy media
Speaker 1: companies because they've moved so much great content, including sports,
Speaker 1: to streaming, and the tech companies are coming in and
Speaker 1: bidding on these sports rights. You know, we think the
Speaker 1: big next thing you're gonna see in the next four weeks,
Speaker 1: we believe Apple is gonna buy Sunday Ticket, which has
Speaker 1: been on Direct TV for years. We think that moves
Speaker 1: over to Apple. And so you're seeing real massive seismic
Speaker 1: change that is going to have big problems for anybody
Speaker 1: in the cable network business. Now. I know you're a
Speaker 1: prolific Twitter and we were speaking earlier about this whistleblower
Speaker 1: that's come forward that could potentially give Elon Musk and
Speaker 1: Edge and this battle Royale to get out of that
Speaker 1: billion dollar deal to buy Twitter. What's your take. You know,
Speaker 1: it comes down to essentially one fundamental issue is did
Speaker 1: Twitter falsified it's public files? Because the deal that Alan
Speaker 1: Must agreed to didn't talk about bots or the percentage
Speaker 1: of bots or any of that. It basically just relied
Speaker 1: on the validity of Twitter's public filings. And if you
Speaker 1: read Twitter's public filings, it says, you know, we make
Speaker 1: a lot of assumptions in how we look at the
Speaker 1: bot number. We think it's under five percent, but we
Speaker 1: could be wrong if Twitter knowingly knew the number was
Speaker 1: far larger than five and every one of Twitter's filings
Speaker 1: was essentially fraudulent because they were basically filing fraudulent documents
Speaker 1: with the SEC. Then Musk has a case. Now, I
Speaker 1: find it hard to believe that Jack Dorsey and Ned
Speaker 1: Siegel and sort of the entire management team at Twitter
Speaker 1: has willfully for years been filing false SEC documents. It's
Speaker 1: obviously possible. I think it's unlikely unless those documents, Unless
Speaker 1: those filings with the SEC are knowingly false. Twitter has
Speaker 1: already said they could have bad mistakes and how they
Speaker 1: did this. It's that this is not an exact science.
Speaker 1: If that's the case, Ellen will be paying fifty right.
Speaker 1: And to be clear, we're talking about the number of
Speaker 1: bots that advertisers that that that actually see advertising that
Speaker 1: are counted at m a is not the number of
Speaker 1: bots overall. Um, that's what they're referring to with that
Speaker 1: five percent less than five percent number. Correct. It's there
Speaker 1: are certainly good bots that are part of Twitter that
Speaker 1: you actually would want there. But in terms of sort
Speaker 1: of the spami part that shouldn't be counted as actually um,
Speaker 1: you know, monetize able d a uses Twitter calls them
Speaker 1: m d a us is actually the term Twitter uses
Speaker 1: they have said repeatedly that the percentage of bots on
Speaker 1: a quarterly basis is sub five percent based on their analysis,
Speaker 1: but that analysis could be flawed. You would have to
Speaker 1: believe that they knowingly knew, I mean, they factually knew
Speaker 1: the number was north of five and chose to do
Speaker 1: different disclosure in the SEC filings. That's the only way
Speaker 1: must gets out of paying right right, okay? Which Queenfield
Speaker 1: Hid Partners to have you here, Rich, Thank you for
Speaker 1: stopping by. Zoom was the pandemic's golden child, but that
Speaker 1: transition from an essential covid Ara tool to an enterprise
Speaker 1: business platform may not happen as quickly as some expected.
Speaker 1: Let's talk about all that and more. Was Zoom. CFO
Speaker 1: Kelly Steckelberg here, Kelly. Great to have you back with us.
Speaker 1: So let's talk about the good news and the less
Speaker 1: good news. Obviously, you're you're seeing growth from enterprise customers,
Speaker 1: but you're losing consumers and small businesses. Let's start there. When,
Speaker 1: how and where do you expect that to stabilize? So
Speaker 1: great to see you, Emily, Thank you. Um. As you mentioned,
Speaker 1: we're really pleased with the performance in the enterprise, which
Speaker 1: grew year over year. We can talk about zoom Phone
Speaker 1: and the very strong performance there, but in our online
Speaker 1: segment of the business, as you mentioned, there certainly were
Speaker 1: some headwinds, a lot of it due to strengthen the dollar,
Speaker 1: as well as impact that we're seeing from the war
Speaker 1: in Europe, but also just slower acquisition of new customers
Speaker 1: at the top of the funnel, which is having impact
Speaker 1: as people are moving around the world again and going
Speaker 1: out to happy hour with their friends rather than doing
Speaker 1: that over zoom and slowing sales growth among corporate customers.
Speaker 1: Is that a sign of slowing corporate demand? Is that
Speaker 1: because of the macro economic issues we're seeing. So we
Speaker 1: had a very strong quarter from an enterprise perspective. Our
Speaker 1: overall bookings came in stronger than we expected and revenue
Speaker 1: at now we are starting to see our enterprise sales
Speaker 1: cycles moving towards more normalized enterprise cycles, which meant they
Speaker 1: were a little bit more back end loaded in the quarter.
Speaker 1: That led to higher than expected deferred revenue, though just
Speaker 1: a little bit less contribution to revenue in the quarter itself.
Speaker 1: But zoom Phone was very strong performance. We crossed over
Speaker 1: that four million seat mark in August we're excited to
Speaker 1: talk about We had two record deals with seat size
Speaker 1: of greater than hundred and we're seeing strength in some
Speaker 1: of our new products, including Zoom Contact Center and Zoom
Speaker 1: i ke for sales. Bigger picture, there's this narrative that
Speaker 1: the pendulum swinging back to the office, Apple calling workers
Speaker 1: back to the office next month. Employees are pushing back, yes,
Speaker 1: but you know this is still the policy at least
Speaker 1: as of now. I know. Zoom did its own survey
Speaker 1: on hybrid work. You found that executives still want that
Speaker 1: hybrid work environment. How are you adding all of this
Speaker 1: up and trying to figure out how this will translate
Speaker 1: into demand. Yeah. So the great thing about Zoom technology
Speaker 1: is it enables work both at home and in the office,
Speaker 1: and they're both really important. So we see organizations recognizing
Speaker 1: that they need to maintain their Zoom licenses for their
Speaker 1: employees that are working at home, but also our technology
Speaker 1: like Zoom rooms, smart gallery workplace reservations allow them to
Speaker 1: then interact with those employees that are in the office
Speaker 1: in a very inclusive way. And so having the right
Speaker 1: technology in your conference room is becoming more and more
Speaker 1: important every single day. We've all come used to seeing
Speaker 1: everybody's face on a square, and so technology like smart
Speaker 1: gallery enables that even if you're the one like me
Speaker 1: who I've moved out of the state of California sitting
Speaker 1: in Texas, sees everybody that's in that room and feels
Speaker 1: really included in that conversation. And so we're excited about
Speaker 1: the prospects of hybrid work and Zoom technology is there
Speaker 1: to support it. So just about thirty seconds left, Kelly,
Speaker 1: what is the next year of gross look like to you?
Speaker 1: Where does most of that growth come from? Quickly? So,
Speaker 1: certainly it's going to come from our enterprise segment, and
Speaker 1: we are also focused on lots of new initiatives in
Speaker 1: the online segment that will drive it first to being
Speaker 1: flat but eventually a growth driver as well. All Right,
Speaker 1: Kelly Stuckelberg's CFO of Zoom. Always good to have you here. Kelly,
Speaker 1: thank you for stopping by. Well, come back to Bloomer
Speaker 1: Technology and Emily Changese San Francisco. The FTC is breaking
Speaker 1: with tradition and it's clamped down on big tech. Meta
Speaker 1: says it learned that the Federal Trade Commission was suing
Speaker 1: the company over it's within virtual reality acquisition via a tweet.
Speaker 1: The FTC typically gives companies a chance to meet with
Speaker 1: commissioners and argue their case before filing a lawsuit. Here
Speaker 1: to explain what happened, our very own Alex Brenka what
Speaker 1: happened indeed, Alex Yeah, Meta executives and lawyers apparently found
Speaker 1: out from this tweet that the FTC was suing them
Speaker 1: in kind of an unusual case that I'm sure we
Speaker 1: can kind of talk about in a second. Basically, what
Speaker 1: typically happens in these situations is of the deals large
Speaker 1: enough UM, they have to file documents to the FTC,
Speaker 1: which our sources told us they did they felt hundreds
Speaker 1: of documents and data points, and then if a suit
Speaker 1: is imminent, usually there are depositions before that happens. No
Speaker 1: depositions happened in this case, UM, and the company was
Speaker 1: alerted to this via tweet. I will say the FTC
Speaker 1: initially didn't comment on this story. They did get back
Speaker 1: to us today saying that they followed typical practice by
Speaker 1: notifying the company after the fact. That being said, our
Speaker 1: sources say this was unusual to not have any inkling
Speaker 1: UM that they would be coming for them to sue
Speaker 1: to block this virtual reality deal. What is this signal
Speaker 1: about the FTCs approach on future cases. Yeah, it's a
Speaker 1: bit of a different approach now under m Chairperson Lena
Speaker 1: con You'll remember Cohn is a a Biden appointee M
Speaker 1: who was basically brought into the agency that is meant
Speaker 1: to enforce anti trust laws, and she's taken a pretty
Speaker 1: aggressive approach. This suit in and of itself, UM makes
Speaker 1: kind of a little used argument um called the nascent
Speaker 1: competition claim that basically means that they are suing to
Speaker 1: block this deal on the future potential of this small
Speaker 1: and growing industry. UM. And they've alleged that Meta is
Speaker 1: a position of the of Within and its apps Supernatural
Speaker 1: can actually camp down competition because it doesn't give the
Speaker 1: tech giant the opportunity to use its resources to create
Speaker 1: more competition in this space. So a lot of unique
Speaker 1: things happening with this case, for sure, but it all
Speaker 1: alludes to this kind of more aggressive posturing up Kahn
Speaker 1: and the Democratic Commissioners on the FTC against big tech companies.
Speaker 1: I spoke with Congressman David Ceellini yesterday and asked him
Speaker 1: about Lena Kahan and her approach and this lawsuit in particular.
Speaker 1: Some critics have said this is such a small company,
Speaker 1: wise the FTC bothering with bothering with this. Of course,
Speaker 1: Meta has said the deal would increase competition. Take a
Speaker 1: listen to what Representative Cellini had to say. I don't
Speaker 1: think we can take any representation made by Meadow or
Speaker 1: Facebook remark Zuckerberg seriously, time and time again, they've been
Speaker 1: found to be engaging in anti competitive behaviors. M He
Speaker 1: went on to argue how much Meta and Facebook in
Speaker 1: particular are anti competitive, and how supportive he is of
Speaker 1: Lena Khan's approach. You know, of course that's just one lawmaker.
Speaker 1: But what do we know about the support that Lena
Speaker 1: Khan has in Congress to continue? You know, you'll remember
Speaker 1: the House came out with a report basically pointing out
Speaker 1: that Meta alone had acquired more than a hundred smaller
Speaker 1: companies in the decades prior. And this within case is
Speaker 1: the only time the FTC has actually sued preemptively to
Speaker 1: stop one of those deals. For folks like Cecilina, No,
Speaker 1: they might be looking at things like the ongoing back
Speaker 1: and forth that Meta still has regarding the Instagram and
Speaker 1: what'sapp acquisitions UM. That issue is also with the FTC
Speaker 1: from Lena cons predecessor UM. So I think that folks
Speaker 1: on who take that kind of approach that that he
Speaker 1: was talking through there, think that the FTC perhaps hasn't
Speaker 1: done enough on the anti trust side to make sure
Speaker 1: that these giant tech companies aren't basically hoovering up everyone
Speaker 1: out there to either camp down or assure that they
Speaker 1: have UM what they said in in this lawsuit is
Speaker 1: a monopoly on a potential future market. All right, Alex Brenka,
Speaker 1: thank you for your reporting on this. Of course we'll
Speaker 1: continue to follow now, moving on to the world of cybersecurity,
Speaker 1: shares of Palo Alto Networks sword as much as twelve
Speaker 1: Tuesday after the network security company reported strong quarterly results,
Speaker 1: saying it expects sales to increase by at least in
Speaker 1: fiscal year three, but can the cybersecurity landscape? Will the
Speaker 1: cyber landscape sustained its growth? To talk about all that
Speaker 1: and more is Palo Alto Network CEO Nikesh Arora. Nikesh,
Speaker 1: great to have you back with us as always, so
Speaker 1: look very positive eardings report to beat h good forecast.
Speaker 1: You seem to be bucking the trend because we've heard
Speaker 1: a lot of bad news from other tech company is
Speaker 1: how so, I don't know what. I don't know, Emily,
Speaker 1: maybe I don't know something. But we're seeing noise. We're
Speaker 1: not seeing a signal out there telling us that there
Speaker 1: is impending doom. Look, we see inflation, we see macroeconomic trends.
Speaker 1: We saw a version of this two years ago with
Speaker 1: a pandemic. People thought that the floor was going to
Speaker 1: fall away from under us. All went to zero dollars.
Speaker 1: Revenues vanished for companies, and we seem to have powered through.
Speaker 1: So I don't think this one is as bad as
Speaker 1: that when it was two years ago. Do you expect
Speaker 1: a man to keep up though? Or could companies tighten
Speaker 1: their belts over the next few quarters and could not
Speaker 1: impact how much software and cybersecurity services they want to buy.
Speaker 1: You know, it's interesting if I've been talking to investors
Speaker 1: all day and a whole bunch of market commentators about
Speaker 1: our stock and what we see in the market, and
Speaker 1: the pandemics said about a series of transformations and technology
Speaker 1: because companies saw that they were wanting in many areas
Speaker 1: they air e commerce infrastructure was not up to snuff,
Speaker 1: which they had to upgrade because they're trying to sell
Speaker 1: everything on the web. Their customer interaction mechanisms were not
Speaker 1: in place because every customer wanted to interact with them
Speaker 1: digitally because they didn't want to touch people or see
Speaker 1: people anymore. So a lot of technology transformation projects started
Speaker 1: in the midst of the pandemic, even a whole bunch
Speaker 1: of the cloud transformation so and hybrid works. If you
Speaker 1: add all that up, the unleashed two cities of technology
Speaker 1: transformations and couple that with the tremendous amount of cyber
Speaker 1: activity you've seen on the awareness and that so we're
Speaker 1: seeing a deal when for security, which is I think
Speaker 1: more secular and might get dented on the margin, but
Speaker 1: I think it's still one of the safest and strongest
Speaker 1: sectors to be in overall. How would you describe the
Speaker 1: threat landscape right now? Obviously there's this ongoing war on Ukraine,
Speaker 1: but the potential, you know, huge cyber apocalypse that you know,
Speaker 1: some were warning about with that hasn't necessarily materialized. There's
Speaker 1: ongoing tension with China, of course. How do you how
Speaker 1: do you see these global factors impacting the threat? Well,
Speaker 1: like I think, if you'll step back and look at it,
Speaker 1: you know, every one of our companies has become digital.
Speaker 1: It's uh and every time you have digitally enabled businesses
Speaker 1: to open the door for people to be able to
Speaker 1: enter from whatever they want. On top of that, we
Speaker 1: made everybody work from home. So suddenly your attack surface
Speaker 1: is what we call it, suddenly expanded. Every employee's home
Speaker 1: is a potential attack factor, everybody's laptop is every every
Speaker 1: interaction that you have with your customers digitally is a
Speaker 1: potential way if you're getting hacked. And we've seen that.
Speaker 1: We've seen that in ransomware. We've seen that business email
Speaker 1: compromise is seventy percent of the incidents last year. We're
Speaker 1: driven from business email compromise or ransomware. Ransomware spent. You know,
Speaker 1: songs have gone to a million dollars per ran serware
Speaker 1: went every four hours. There's a ransomware leak on some
Speaker 1: website somewhere. So clearly this is not just a nation
Speaker 1: state threat. It also is an economic opportunity for small
Speaker 1: you know, hackers or hacker groups just build consortia to
Speaker 1: start making sort of making these economic demands on a
Speaker 1: bunch of people or ransomer perspective. You're seeing the threat
Speaker 1: landscape get more sort of adverse. At the same time,
Speaker 1: in a nation, states are looking at preparedness because of
Speaker 1: the Ukraine that urgency. Am I ready to withstand an attack?
Speaker 1: We haven't seen a cybersecurity applica lips because we've actually
Speaker 1: had real lives lost and devastation costs in Ukraine. However,
Speaker 1: do not underestimate the amount of cyber activities has gone
Speaker 1: down in terms of trying to bring the ukin in
Speaker 1: websites down in you know, white activists, right activist going
Speaker 1: after Russian sides because they don't like more Russia's doing.
Speaker 1: So you are seeing a tremendous amount of cyber activity
Speaker 1: activity we haven't seen before. There's a new whistleblower in
Speaker 1: social media and I'm just dying to get your thoughts
Speaker 1: on this. This former employee of Twitter, former head of security.
Speaker 1: They're claiming negligent security policies, you know, egregious deficiencies and
Speaker 1: how they're handling personal data that they don't know how
Speaker 1: many pots they're even are. You know, there's been some
Speaker 1: pushback on this. You know, this sounds like something could
Speaker 1: be happening within a lot of companies. What's your take,
Speaker 1: I don't know. I don't know the particulars of the
Speaker 1: situation at Twitter. I read about it probably just as
Speaker 1: recently as you did. I don't know what's happening there.
Speaker 1: I will say that one of the things we've been
Speaker 1: canvassing for and hoping for is more scrutiny and more
Speaker 1: awareness at boards about the threats of cybersecurity. I think
Speaker 1: cybersecurity is the biggest business continuity to risk in the
Speaker 1: twenty one century, and I don't think boards are well
Speaker 1: prepared to understand the magnitude, understand the impact that can
Speaker 1: be had, and really to be able to assess whether
Speaker 1: their individual company is up to snuff in those capabilities.
Speaker 1: So I think it's it's in need of the hour.
Speaker 1: I think the SEC is looking at various mechanisms to
Speaker 1: be able to create sort of regulation around how people
Speaker 1: have to disclose cyber activity and cyber readiness, just the
Speaker 1: way we do in audit committees and finance, etcetera. Well,
Speaker 1: there's also this quote number that we've been hearing over
Speaker 1: and over again, six open cyber jobs. I mean, you
Speaker 1: mentioned it's the responsibility of board, but you know it
Speaker 1: is it the government who should be stepping in here
Speaker 1: to help fill these jobs? Is it country? I heard
Speaker 1: three and a half million, Emily, so I'm glad if
Speaker 1: it's six d it's a lot. Yes, there's a lot
Speaker 1: of jobs, and you know we're almost a full employment,
Speaker 1: so yes, we need to make sure that keep ample
Speaker 1: trained people. I think this is a double dual legs problem.
Speaker 1: This is not a singular problem of finding six in
Speaker 1: a thousand cybersecurity enthusiasts or professionals. I think the fundamental
Speaker 1: problem is we have not applied ample automation and security,
Speaker 1: which requires a bunch of clean data, requires a bunch
Speaker 1: of integration, a brunch for platformization for cybersecurity, which is
Speaker 1: what we're trying to do in a whole bunch of
Speaker 1: others are I think the only we solved the cybersecurity
Speaker 1: problem is if he can build a eye that actually
Speaker 1: stops these attacks whilst are happening. That today's model is
Speaker 1: not going to work. Today's model is to be something happens.
Speaker 1: We collect all the data and large data lakes, and
Speaker 1: then we have people go attack hacked them, to look
Speaker 1: at them to see what actually happened, and manually try
Speaker 1: to find the problem. I think those days are over
Speaker 1: requires a lot more automation. We think we can all
Speaker 1: the majority that's six dollars or three half billion people
Speaker 1: problem by doing that. Yeah, you also need more cybersecurity
Speaker 1: train professions. Now, so curious for your thoughts on this
Speaker 1: last one here, you of course were Massio. She sends
Speaker 1: number two long before he launched the Vision Fund. Now
Speaker 1: we know he's lost tens of billions of dollars on
Speaker 1: some of these tech investments. What do you make of this?
Speaker 1: And what do you think the legacy of Massa and
Speaker 1: soft Bank will be in spite of this? Alright? You
Speaker 1: know Massa as a resilient individual. Um, he's been through
Speaker 1: this before. He went from boom to bust to the
Speaker 1: last Internet Boston. He sort of reinvented himself. And the
Speaker 1: one thing I loved about him is that he has
Speaker 1: immense appetite for risk. And his appetite for risk and
Speaker 1: his ability to forget his failures is what all of
Speaker 1: Silicon Valley teaches us. So hopefully he can recover from
Speaker 1: that and go build it back himself. And I think
Speaker 1: last time he was down to a billion dollars. I
Speaker 1: think it's a lot more this time than the last time.
Speaker 1: So I have faith in his ability to rest, to
Speaker 1: resurrect himself. But yes, I do think he got a
Speaker 1: bunch of companies at the wrong end. All Right, Nikesh,
Speaker 1: a CEO of palots On Network, is good to have
Speaker 1: you back, Nicksh, thank you for stopping by. All right,
Speaker 1: Coming up, how the crypto winter coupled with an energy
Speaker 1: crunch is impacting bitcoin mining war on that next. This
Speaker 1: is Bloomberg time now for our crypto report, and the
Speaker 1: usually volatile bitcoin has gotten stuck trading within a narrow
Speaker 1: range ahead of the fed's annual Jackson Hole meeting later
Speaker 1: this week, covering around six hundred dollars. Mike Alfred, board
Speaker 1: member of the bitcoin minor Iris Energy, and the crypto
Speaker 1: focused investment firm Eagle Brook Advisers, talked to Kayleie Lines
Speaker 1: on the Bloomberg Crypto shirt show earlier to talk about
Speaker 1: the markets impact on bitcoin mining. It's certainly been a
Speaker 1: difficult time. And I was with a bunch of the
Speaker 1: miners in Miami about a month ago now, and you know,
Speaker 1: the moods a little darker. Uh. The bitcoin price being
Speaker 1: under twenty thousand obviously isn't good for anyone, because profitability
Speaker 1: tends to flip negative for a lot of the large
Speaker 1: miners around those levels. Um. You know, the cost of
Speaker 1: machines has gone down though, so if you're a buyer
Speaker 1: of machines here, uh, you know, you're getting a much
Speaker 1: better price than you were a year ago. UM. And
Speaker 1: energy prices, while they're going up, they could certainly, um
Speaker 1: you know, be held down a little bit by by
Speaker 1: macro uncertainty, at least in the US where there's sort
Speaker 1: of an oversupply of energy. So I actually believe just
Speaker 1: based on the hash ribbons, which is a metric that
Speaker 1: looks at the thirty day moving average of the global
Speaker 1: hash rate relative to the sixty day it just flipped
Speaker 1: positive again in the last week, right after being negative
Speaker 1: since sort of at some point during July. UM. I
Speaker 1: actually think the capitulation phases over. There were miners that
Speaker 1: were literally buying bitcoin at forty thousand and then they
Speaker 1: puked that bitcoin back into the market at twenty UM.
Speaker 1: I think that speaks to, you know, the general strategy
Speaker 1: that people should have around their balance sheet here. I
Speaker 1: think there's two strategies that sort of work well. One
Speaker 1: is just selling your bitcoin every day the way Irish
Speaker 1: Energy does, and that way you can grow just add
Speaker 1: a cash flow or like het eight, just holding the
Speaker 1: bitcoin indefinitely, but using equity and debt strategically and not
Speaker 1: taking on too much debt and then growing at a
Speaker 1: reasonable speed so that you don't get caught at the
Speaker 1: wrong part of the cycle flat footed. We think that
Speaker 1: in mid September the merge may finally happen. Ethereum will
Speaker 1: move from proof of work to proof of steak. How
Speaker 1: does the upcoming merge affect your review on how you
Speaker 1: want to be investing in in these kinds of companies, Well,
Speaker 1: I think the bitcoin only um. You know, miners are
Speaker 1: always going to be a good bet because if you
Speaker 1: believe in a decentralized or truly decentralized monetary system, it
Speaker 1: will not function properly under a proof of steak model.
Speaker 1: So as much as ethereum could be an interesting currency
Speaker 1: for doing n f t S or right doing de
Speaker 1: fi or whatever, um it's not going to be the
Speaker 1: same thing that bitcoin is if if it moves off
Speaker 1: a proof work and so I don't think it changes
Speaker 1: anything with the thesis, Like if if people want to
Speaker 1: speculate on n f T s right that that doesn't
Speaker 1: bother me one bit on a free market capitalist. But
Speaker 1: if you want to own a truly hard asset with
Speaker 1: a supply cap that cannot be disrupted, that cannot be
Speaker 1: sort of taken over by any one party, you kind
Speaker 1: of need to stick with proof of work. And therefore
Speaker 1: I think bitcoin mining, at least again in North America,
Speaker 1: has a great future Mike Alfred. They're Irish Energy and
Speaker 1: Eagle Brook Advisors with Kaylee Lines. Workers are fighting executives
Speaker 1: pushing for a full and even part time return to
Speaker 1: the office. The latest example coming from Apple. More than
Speaker 1: two hundred Apple employees have signed a position the manning
Speaker 1: the company continue it's flexible work policies instead of it's
Speaker 1: planned return to the office September five and requiring company
Speaker 1: employees to come in two to three days a week.
Speaker 1: They want hybrid schedules with direct reports rather than a
Speaker 1: corporate blanket policies. This comes at a time when the
Speaker 1: term quiet quitting is making the rounds on social media.
Speaker 1: The idea is not that employees actually quit, but instead
Speaker 1: do the bare minimum that the job requires to maintain
Speaker 1: a healthy work life balance. Here to discuss Daniel Chake,
Speaker 1: co found and CEO of Greenhouse, which offers recruiting software
Speaker 1: as a service. So does the Apple store resonate with
Speaker 1: you based on what you're seeing from your clients? Daniel, Yeah,
Speaker 1: you know, we've heard a lot of companies who went,
Speaker 1: you know, in the pandemic, they all went and remote
Speaker 1: and distributed, and then now when things are changing again,
Speaker 1: they want their employees back in the office because they
Speaker 1: think that being there and being able to see those
Speaker 1: employees somehow equals culture or somehow equals proactivity. And I
Speaker 1: think what's interesting about the Apple story is what the
Speaker 1: employees are saying is we're being productive, We're giving our best,
Speaker 1: and the way we can be the most productive is
Speaker 1: by is by working in this more flexible way. So
Speaker 1: it's it's kind of you hear it in the same
Speaker 1: sentence as this kind of quite quit in conversation, But
Speaker 1: it's actually, to me more a story of the power
Speaker 1: of employees to create value and the role of the
Speaker 1: company in either helping them do that or or trying
Speaker 1: to change how they do that well. And you'll see
Speaker 1: whether Apple acquiesces here in any way. But you know,
Speaker 1: doesn't seem that the pendulum is swinging back to the office,
Speaker 1: and executives or those who won't work us back to
Speaker 1: the office, are having more power than they did a
Speaker 1: year ago when we were, you know, just starting to
Speaker 1: work through O Macron. We'll see. You know, Look, the
Speaker 1: pendulum has been swinging for decades in favor of employees
Speaker 1: who have more power and more control than ever before.
Speaker 1: And so companies are finding themselves in this position of
Speaker 1: having to be people first and and and taking that
Speaker 1: on as as an opportunity and as a strategy has
Speaker 1: been very successful. Now some companies kind of or leaders
Speaker 1: wanted to be the way it was, or or someone
Speaker 1: trying to return to that think they're I think some
Speaker 1: of them are finding themselves stuck. And you know, ultimately,
Speaker 1: value is created by talent and people. If you're, as
Speaker 1: a leader not able to put those people in the
Speaker 1: best position to create value, then you know you've got
Speaker 1: a real You've got a real problem. And so look,
Speaker 1: I think there are some companies, like you know, Apple,
Speaker 1: who have a huge investment in real estate and a
Speaker 1: big state of the art office, and they want to
Speaker 1: position that as an asset and as a strength to
Speaker 1: those employees. And some employees want that. For some people,
Speaker 1: no doubt, getting up going to an office being with
Speaker 1: other people is really attractive and really helpful to them,
Speaker 1: But for others it's not. And so I think what
Speaker 1: you're more seeing is, you know, multiple different kind of
Speaker 1: talent pools developing where some talent wants to work remotely, oh,
Speaker 1: their talent wants to work in the office, and companies
Speaker 1: are kind of having to choose which part of the
Speaker 1: talent pool they want to plane, but in all cases
Speaker 1: they have to choose based on what the talent wants.
Speaker 1: It's it's the people first that's driving decisions. How how
Speaker 1: is this in acting hiring and retention? I mean, are
Speaker 1: you seeing a lot of people quit, a lot of
Speaker 1: people voting with their feet? Well, look, unemployment is still
Speaker 1: at historically you know, very low levels, and I think
Speaker 1: it's it's easier than ever to get a job, right.
Speaker 1: You know, people can just swipe left on you and
Speaker 1: swipe left on someone else and they're working in a
Speaker 1: new company. They don't have to get a new you know,
Speaker 1: commute um. And so what we're seeing is, yeah, people
Speaker 1: are resigning, and you know, in higher numbers than they
Speaker 1: had been. But people are getting hired faster than ever.
Speaker 1: And I think we've got almost two job openings still
Speaker 1: for everyone job seeker in the market today. So it's
Speaker 1: still a talent market and companies are doing their best
Speaker 1: just to try to keep up and compete. Let's talk
Speaker 1: about quiet quitting and this idea of just doing the
Speaker 1: bare minimum, not going to try too hard, not going
Speaker 1: to over exert myself because you know, you know what,
Speaker 1: I'm just gonna do my job. I'm just gonna do
Speaker 1: my job. Um what what impact is this having. Yeah, look,
Speaker 1: there's nothing wrong with doing your job and not you know,
Speaker 1: ruining your life in order to in order to achieve um.
Speaker 1: But at the same time, you know, at the point
Speaker 1: where it kind of moves over into this area of
Speaker 1: sort of you know, sort of quitting or taking advantage
Speaker 1: of the system, you know, it becomes a problem. I
Speaker 1: think what this has shown is that for many companies,
Speaker 1: they don't really have a great way of measuring what
Speaker 1: a good employee actually is. They don't actually know what
Speaker 1: output or what quality really looks like, and so they
Speaker 1: use this thing of how long are you logged into
Speaker 1: your laptop or are you sitting in your cubicle instead
Speaker 1: of knowing which my employees are actually great and what
Speaker 1: do I do to inspire discretionary effort. I think the
Speaker 1: companies who are people first focus on those questions, Um,
Speaker 1: you know, have an advantage and they don't have this
Speaker 1: problem of of employees dropping out, you know, way of
Speaker 1: telling them all right, well, certainly lots to continue to follow. Greenhouse,
Speaker 1: co founder and CEO Channel appreciate you stop and buy
Speaker 1: and give us your take. And that does it for
Speaker 1: this edition of Bloomberg Technology. Coming up later this week Wednesday,
Speaker 1: do not miss my conversation with Microsoft Gaming CEO Phil
Speaker 1: Spencer and check out our podcast. You can find it
Speaker 1: anywhere you get your podcast studio at one point out
Speaker 1: and Bloomberg Technology. I'm Emily Check in San Francisco. This
Speaker 1: is Bloomberg