WEBVTT - Biden in Brussels & Apple's iPhone Subscription 0:00:03.600 --> 0:00:06.880 From the heart of where innovation, money and power COLLI 0:00:07.720 --> 0:00:12.239 in Silicon Valley and beyond. This is Bloomberg Technology with 0:00:12.320 --> 0:00:28.480 Emily Jay. I'm Emily Chang in San Francisco, and this 0:00:28.480 --> 0:00:31.240 is Bloomberg Technology. Coming up in the next hour, NATO 0:00:31.400 --> 0:00:35.199 talks talk sending more troops to europe eastern border with 0:00:35.280 --> 0:00:38.240 Russia and warning Puttin against the use of nuclear weapons. 0:00:38.240 --> 0:00:41.280 We will have the latest from President Biden's trip to Brussels, 0:00:41.320 --> 0:00:45.200 sanctions and what it all means for Russian oil. Plus 0:00:45.240 --> 0:00:48.720 of Bloomberg Exclusive. Apple working on a hardware subscription for 0:00:48.760 --> 0:00:52.400 the iPhone and other hardware products. Why buy a device 0:00:52.400 --> 0:00:54.320 out right when you can just pay a monthly fee? 0:00:54.600 --> 0:00:58.400 Will dial in our very own Mark German and Uber 0:00:58.520 --> 0:01:02.360 will now list New York's city taxi cabs on its app. 0:01:02.520 --> 0:01:05.679 This an effort to ease a driver's shortage and higher 0:01:05.760 --> 0:01:08.280 fares and get a leg up on rival lift. We'll 0:01:08.280 --> 0:01:10.760 get to all of that in a moment. Continuing now, 0:01:11.040 --> 0:01:13.959 the war on Ukraine has now entered its second month. 0:01:14.080 --> 0:01:17.679 President Biden marking that grim milestone in Brussels, meeting with 0:01:17.760 --> 0:01:20.680 Natal leaders about what can be done to stop Russia's 0:01:20.840 --> 0:01:24.520 unprovoked aggression. The President was asked if Russia should remain 0:01:24.600 --> 0:01:26.960 in the G twenty and this is what he had 0:01:27.040 --> 0:01:31.440 to say. My answer is yes, it depends on the 0:01:33.040 --> 0:01:37.720 um I that was raised today, and I raised the 0:01:37.760 --> 0:01:41.000 possibility if that can't be done, if Indonesia and others 0:01:41.000 --> 0:01:45.040 do not agree, then we should, in my view, asked 0:01:45.040 --> 0:01:51.880 to have both UM Ukraine be able to attend the meetings. 0:01:53.880 --> 0:01:55.840 For more on the president's visit, we are joined now 0:01:55.840 --> 0:01:59.480 by a Bloomberg Washington correspondent, Emory Hordern, who is in Brussels. 0:01:59.520 --> 0:02:03.200 Emory obviously a significant statement there from President Biden. So far, 0:02:03.280 --> 0:02:05.280 what has been the reaction to what he has had 0:02:05.320 --> 0:02:11.640 to say and his meeting with top European leaders. Yeah, 0:02:11.639 --> 0:02:13.320 this was really a main headline coming out of that 0:02:13.360 --> 0:02:17.200 press conference the President gave at NATO following his extraordinary meeting, 0:02:17.240 --> 0:02:19.720 and it's been a slew of diplomacy here in Brussels, Emily. 0:02:19.880 --> 0:02:22.280 The President just wrapped up he had a NATO meeting 0:02:22.360 --> 0:02:24.000 at G seven meeting, and then he went over to 0:02:24.040 --> 0:02:28.200 the European Commission to address European leaders. When he says 0:02:28.240 --> 0:02:30.800 that he doesn't he thinks that Russia should be vetoed 0:02:30.840 --> 0:02:34.040 and disinvited from the G twenty. He said that if 0:02:34.080 --> 0:02:37.520 not every G twenty nation agrees, they would ununanimous support. 0:02:37.800 --> 0:02:40.280 He thinks Ukraine at the very least should be invited 0:02:40.520 --> 0:02:42.959 to make sure they're there for part of these conversations. 0:02:43.360 --> 0:02:46.000 After this, Emily, the President will move on to Poland overnight. 0:02:46.040 --> 0:02:48.720 He'll be tomorrow morning, He'll be traveling there and I'll 0:02:48.720 --> 0:02:51.480 be meeting with his counterpart as well as really seeing 0:02:51.800 --> 0:02:54.200 what is happening in terms of the human toll this 0:02:54.280 --> 0:02:56.400 crisis has taken. This is really going to be a 0:02:56.400 --> 0:02:58.560 little bit more of an emotional day. If today was 0:02:58.560 --> 0:03:01.360 really the diplomatic day, tomorrow is really an emotional day 0:03:01.360 --> 0:03:04.800 and day about humanity because this crisis has caused ten 0:03:05.000 --> 0:03:08.880 million Ukrainians displaced either in their own home or more 0:03:08.880 --> 0:03:11.800 than three million have actually fled to bordering countries, and 0:03:11.840 --> 0:03:15.480 Poland really being the ground zero for that. Now there 0:03:15.560 --> 0:03:17.640 is this question about just who President Biden is going 0:03:17.680 --> 0:03:21.320 to meet uh in the next twenty four hours. He was, um, 0:03:21.360 --> 0:03:24.800 you know, a little circumspect about what was coming next. 0:03:24.919 --> 0:03:27.320 What do we know about who exactly he's going to meet, 0:03:27.360 --> 0:03:32.360 and what the impact of those meetings will be Yeah, 0:03:32.360 --> 0:03:34.400 some details at the moment are not released to the 0:03:34.440 --> 0:03:37.640 press obviously for some security concerns. But the President in 0:03:37.680 --> 0:03:39.600 the morning, he'll still be in Brussels and he'll sit 0:03:39.640 --> 0:03:42.800 down with Ursula vander Lyon and we're also are expecting 0:03:42.800 --> 0:03:44.840 from the United States, and the President signaled this this 0:03:44.920 --> 0:03:48.000 evening is some more details about potentially what the US 0:03:48.080 --> 0:03:50.680 can do in terms of shoring up natural gas supplies 0:03:50.760 --> 0:03:53.840 for Europe, because we know how dependent Europe is on 0:03:53.920 --> 0:03:57.640 Russian natural gas and oil and at this moment that 0:03:57.800 --> 0:04:01.160 is really the continuous lifeblood of the An economy that 0:04:01.240 --> 0:04:04.400 has pretty much been saved in terms of these harsh 0:04:04.480 --> 0:04:07.760 penalties and sanctions. Then when the President goes on to Poland, 0:04:07.800 --> 0:04:09.600 we do know over the weekend he'll be sitting down 0:04:09.640 --> 0:04:13.080 for a bilateral with this Polish counterpart, President Data. There's 0:04:13.120 --> 0:04:15.120 going to be a number of issues to discuss, but 0:04:15.440 --> 0:04:18.880 most top of the priority would really be the humanitarian focus, 0:04:18.920 --> 0:04:21.040 given the fact that Poland is really dealing with an 0:04:21.040 --> 0:04:25.440 influx of refugees and asylum seekers from Ukraine. Emory of 0:04:25.440 --> 0:04:27.320 course traveling with the President, but we're going to be 0:04:27.360 --> 0:04:31.520 following the President's every move. Meantime, new exclusive deals on 0:04:31.560 --> 0:04:34.440 the breach of details on the breach of Octa and 0:04:34.440 --> 0:04:35.960 the group behind it. Bloom Brig has learned that a 0:04:36.040 --> 0:04:38.359 sixteen year old from England is believed to be the 0:04:38.400 --> 0:04:41.720 mastermind behind the attack. Bloom Brig's William Turton was behind 0:04:41.760 --> 0:04:44.400 that scoop, he joins us. Now, so William, just who 0:04:44.480 --> 0:04:46.719 is this sixteen year old teenager who lives with his 0:04:46.800 --> 0:04:49.800 mom and how did he pull this off? Well, you know, 0:04:49.800 --> 0:04:52.039 we're not naming him obviously because he's a miner, but 0:04:52.160 --> 0:04:55.120 he's a very talented hacker. One person I spoke to 0:04:55.240 --> 0:04:59.040 who was responding to him hacking a company said that 0:04:59.080 --> 0:05:01.720 he was so fat and so proficient that at first 0:05:01.760 --> 0:05:04.160 when they were observing the activity, they thought it might 0:05:04.200 --> 0:05:06.839 be automated, like it was a script. But no, it 0:05:06.920 --> 0:05:09.880 was just the sixteen year old kid who actually kind 0:05:09.880 --> 0:05:14.599 of has like a pretty expansive online presence of him 0:05:14.760 --> 0:05:19.680 dabbling and hacking. And you know, now he's probably one 0:05:19.720 --> 0:05:22.200 of the most notorious cyber criminals of all time. You know, 0:05:22.240 --> 0:05:25.600 he's achieved that label really quickly because this group has 0:05:25.640 --> 0:05:30.640 hacked into Microsoft Octa and Video. You know, these huge targets. 0:05:30.640 --> 0:05:33.400 That's been millions and millions of dollars on cybersecurity. I mean, 0:05:33.440 --> 0:05:36.360 I haven't seen anything a cyber crime group like this 0:05:36.640 --> 0:05:42.120 in many years. So now that we know who he is, 0:05:42.560 --> 0:05:45.440 what could the consequences for this kind of attack be? 0:05:46.560 --> 0:05:49.440 You know, it's it's really interesting the laws in the UK, 0:05:49.760 --> 0:05:54.240 especially with miners and these sorts of crimes, are pretty different. Um, 0:05:54.320 --> 0:05:57.799 and it's it's it's there's been actually kind of historically 0:05:57.800 --> 0:06:01.200 a problem of when you have miners who are hacking, 0:06:01.320 --> 0:06:04.279 kind of keeping them off the computer. This is really 0:06:04.320 --> 0:06:07.320 reminiscent of the hack of Twitter that happened last year, 0:06:07.440 --> 0:06:10.799 where it was a lot of miners involved in pulling 0:06:10.800 --> 0:06:13.000 off the hack. Now is different because many of them 0:06:13.000 --> 0:06:16.560 were in the US, and you know, they're very quickly arrested, 0:06:16.920 --> 0:06:20.040 but it's it's difficult really to keep these kids away. 0:06:21.480 --> 0:06:23.960 And what do we know about the actual consequences to 0:06:24.160 --> 0:06:26.960 Octa and the businesses that have been affected. Of course, 0:06:26.960 --> 0:06:30.159 Octa has been very clear Octa itself was not breached, 0:06:30.160 --> 0:06:33.480 but there are these three sixties six other businesses that 0:06:33.520 --> 0:06:36.400 were compromised, right right, Yeah, And in part of our 0:06:36.440 --> 0:06:40.279 story yesterday you might have noticed we reported that the 0:06:40.360 --> 0:06:46.240 hackers used their breach of Octa in order to enable 0:06:46.320 --> 0:06:48.440 further hacks. Now we don't know what the details are, 0:06:48.680 --> 0:06:50.719 but if you're a company like the Octa, that's basically 0:06:50.720 --> 0:06:53.360 the worst case scenario. And so you know, I don't 0:06:53.360 --> 0:06:55.520 think we know exactly what happened. We know what the 0:06:55.520 --> 0:06:57.400 company has said so far that there were a limited 0:06:57.520 --> 0:07:00.680 number of accounts actors. But still, when you're a company 0:07:00.720 --> 0:07:03.599 that offers a service that does identity management, it's the 0:07:03.680 --> 0:07:07.000 last thing that you want to happen, all right. Bloomberg's WILLIAMS. 0:07:07.000 --> 0:07:09.320 Turton will continue to watch your reporting on this. Thank 0:07:09.360 --> 0:07:13.400 you for bringing us that story meantime. It is the 0:07:13.440 --> 0:07:16.360 first alliance of its kind in the United States. Uber 0:07:16.440 --> 0:07:20.040 will list New York City a yellow taxis on its 0:07:20.080 --> 0:07:25.120 app to help combat a driver shortage and rising fairs. Yep, 0:07:25.320 --> 0:07:28.080 you heard that right. More on that next, this is Bloomberg. 0:07:43.120 --> 0:07:46.280 Uber will list New York's yellow cabs on its app. 0:07:46.360 --> 0:07:48.760 This is the first alliance of its kind in the 0:07:48.840 --> 0:07:53.480 United States. The announcement sending Uber shares jumping Thursday. I 0:07:53.480 --> 0:07:55.679 want to get more on this with Bloombergs Jackie Dabolos, 0:07:55.920 --> 0:07:58.880 who covers Uber for US and this Jackie after years 0:07:58.880 --> 0:08:01.640 of acrimony, no what he thought this would ever happen? 0:08:01.720 --> 0:08:04.160 Why now you know? No one could have seen this coming. 0:08:04.200 --> 0:08:07.760 It's been a contentious decade ever since Uber stepped onto 0:08:07.760 --> 0:08:10.679 the scene in New York. And really what this means 0:08:10.760 --> 0:08:13.840 is it's an acknowledgement by Uber that they can't do 0:08:13.880 --> 0:08:17.400 this alone. They have said that they want to get 0:08:17.440 --> 0:08:21.600 every taxi in the world on their app by and 0:08:21.600 --> 0:08:23.920 it's a really ambitious school. So to be able to 0:08:23.960 --> 0:08:25.960 pull it off in New York is a true sign 0:08:26.000 --> 0:08:28.640 that they are going to tackle this in the US 0:08:28.640 --> 0:08:31.040 head on, and it's a good sign that they might 0:08:31.160 --> 0:08:34.080 get a competitive edge over Lift. So a few things 0:08:34.080 --> 0:08:36.480 at play, but more so you have to think about 0:08:36.480 --> 0:08:39.360 the driver's shortage. They needed a boost to supply, and 0:08:39.400 --> 0:08:41.880 this is certainly going to give them that. What does 0:08:41.880 --> 0:08:44.760 this mean for drivers? Uber is billing it as a 0:08:44.800 --> 0:08:47.280 win for them, is it really And what does it 0:08:47.280 --> 0:08:52.320 mean for fares given gas prices and inflation? More broadly, Well, 0:08:52.679 --> 0:08:56.439 for sure the boost and supply, it's about fourteen thousand 0:08:56.760 --> 0:08:58.920 taxis in New York that are now going to be 0:08:58.960 --> 0:09:02.040 available on the Uber app. Customers can hail arrived just 0:09:02.160 --> 0:09:05.040 they like they normally do, but now it could be 0:09:05.080 --> 0:09:07.520 a cab waiting to pick them up. And so for 0:09:07.720 --> 0:09:10.400 the cab driver, they're going to be paid in the 0:09:10.480 --> 0:09:13.240 same way that other app based drivers in New York 0:09:13.240 --> 0:09:15.400 are paid. They have a minimum wage that's set by 0:09:15.400 --> 0:09:18.720 the city, and this differs from the metered fares that 0:09:18.840 --> 0:09:22.000 they are typically used to. Now. Uber says that this 0:09:22.480 --> 0:09:25.679 rate that they're paid by the city is actually better 0:09:25.840 --> 0:09:28.360 on average than the metered rates. So this could be 0:09:28.440 --> 0:09:31.000 a boost in earnings for New York cities cab drivers, 0:09:31.040 --> 0:09:34.480 but also, you know, just more business. They saw their 0:09:34.520 --> 0:09:38.280 demand for cabs decimated when ride hailing came into town, 0:09:38.559 --> 0:09:41.320 and so I think from one perspective, it's not just 0:09:41.400 --> 0:09:44.319 going to put more people in their cars, but also 0:09:44.360 --> 0:09:47.760 maybe more money in their pockets. All Right, how times 0:09:47.800 --> 0:09:51.000 have changed. Bloombergh JACKI Davilos. We'll see how this works out. 0:09:51.240 --> 0:09:54.400 We're gonna continue this conversation with the CEO of Hulbert himself. 0:09:54.400 --> 0:09:57.720 You can tune into Bloomberg Technology Tuesday for our exclusive 0:09:57.760 --> 0:10:01.360 interview with Dara Cosmash. I'm catching up with him at 0:10:01.360 --> 0:10:03.880 Shop Top, one of the biggest retail conferences in the 0:10:03.920 --> 0:10:09.760 world in Las Vegas. Meantime, shares of ev maker Rivian 0:10:09.880 --> 0:10:12.800 rose to the highest level in three weeks. The company 0:10:12.840 --> 0:10:15.400 has been in the spotlight since it's glitzy November I 0:10:15.480 --> 0:10:18.200 p O, but the stock has tumbled ever since, and 0:10:18.320 --> 0:10:21.439 Rivian's value has fallen from one billion dollars to just 0:10:21.880 --> 0:10:25.600 forty two billion. Bloomberg News spoke with the company's CFO, 0:10:25.880 --> 0:10:28.400 Claire McDonough, who says if the company can wramp up 0:10:28.400 --> 0:10:32.319 production and build capacity, the share price will quote take 0:10:32.360 --> 0:10:44.480 care of itself. With the war on Ukraine still raging 0:10:44.559 --> 0:10:48.240 and inflation here in the US, companies and investors alike 0:10:48.280 --> 0:10:50.800 contending with fall little markets. How long will it last? 0:10:50.880 --> 0:10:53.240 And what is the path forward? Let's talk about it 0:10:53.280 --> 0:10:56.800 all with Kathy Gow, partner at Sapphire Ventures. Kathy, what 0:10:56.840 --> 0:11:00.200 are you telling your company's about how long to plan 0:11:00.320 --> 0:11:05.440 for this kind of market volatility and how to navigate it? Oh, Emily, 0:11:05.440 --> 0:11:07.600 It's so great to be here. First of all, as always, 0:11:08.559 --> 0:11:12.040 what confusing times we live in, right everyone is trying 0:11:12.080 --> 0:11:14.520 to make sense of it all, and I'm super happy 0:11:14.559 --> 0:11:18.079 to be here today to share my perspective as a 0:11:18.200 --> 0:11:22.240 venture investor. Now, I think the word everyone is using today, 0:11:22.280 --> 0:11:26.959 including myself, to describe the current approach the market is uncertain. 0:11:27.360 --> 0:11:30.760 About half of the NASDAC had valuations slashed by fifty 0:11:31.840 --> 0:11:35.280 in a matter of weeks, and uncertainty is really the 0:11:35.280 --> 0:11:39.000 foe of the markets. This turbulence is creating a very 0:11:39.120 --> 0:11:45.160 very confusing fundraising environment for tech entrepreneurs and for investors. Frankly, 0:11:45.360 --> 0:11:48.480 no one knows what's going to happen right But because 0:11:48.559 --> 0:11:51.000 no one has the magic ball, there are certain ways 0:11:51.080 --> 0:11:54.880 that founders can prepare themselves, even though we don't know 0:11:55.320 --> 0:11:58.640 when the other shoe, so to speak, will drop or 0:11:58.679 --> 0:12:01.520 how far it is to drop up. How is this 0:12:01.640 --> 0:12:06.040 impacting valuations? It certainly seems like things have taken a pause, 0:12:06.480 --> 0:12:09.520 if if not some companies maybe having to take a haircut. 0:12:09.559 --> 0:12:12.520 If you're trying to raise money right now, well you 0:12:12.559 --> 0:12:16.240 know what private markets for software companies, and I focus 0:12:16.280 --> 0:12:19.040 on software companies, so other markets might be seeing different 0:12:19.080 --> 0:12:23.960 things have not yet meaningfully corrected. I am hearing some 0:12:24.160 --> 0:12:29.360 anecdotal stories about lower valuations and some reed trades in 0:12:29.600 --> 0:12:32.600 later stage deals, but there's not been a lot of 0:12:32.679 --> 0:12:36.880 discernible pattern yet. Frankly, the early stage also seems to 0:12:36.880 --> 0:12:40.520 be quite insulated at this point in time, and I 0:12:40.559 --> 0:12:42.960 think it's important to also call out that there is 0:12:43.160 --> 0:12:47.640 a lag between public market movements and the private markets, 0:12:48.000 --> 0:12:50.880 and we haven't felt the full impact yet in the 0:12:50.960 --> 0:12:54.920 private markets now. This lag has been seen in prior 0:12:55.000 --> 0:12:58.200 cycles as well, in the dot com crash during the 0:12:58.240 --> 0:13:02.280 Great Recession. This time, there's also just a massive amount 0:13:02.320 --> 0:13:05.559 of dry powder on the sidelines. I think over a 0:13:05.640 --> 0:13:08.880 hundred billion was raised last year by US venture capital 0:13:08.920 --> 0:13:11.960 firms alone. So given the amount of dry powder, do 0:13:12.040 --> 0:13:15.400 you think that we won't necessarily see as dramatic and 0:13:15.480 --> 0:13:18.240 impact on private markets that we would had all that 0:13:18.280 --> 0:13:23.120 money not been raised. It's definitely a counter counter force 0:13:23.280 --> 0:13:26.200 to what's happening in the market. But you know, my 0:13:26.200 --> 0:13:30.280 my prediction is that we will see an impact in 0:13:30.280 --> 0:13:33.440 the private markets first with the late stage, which we're 0:13:33.559 --> 0:13:37.680 kind of seeing already, But usually these things take a quarter, 0:13:37.920 --> 0:13:41.040 two quarters, maybe three quarters to see and will hit 0:13:41.080 --> 0:13:44.280 the late stage companies first, flow into the mid sector, 0:13:44.440 --> 0:13:48.640 and then hit the earliest stage companies last. So what 0:13:48.720 --> 0:13:51.800 do you see it is coming next? If you could 0:13:52.520 --> 0:13:54.480 sort of map out the second half of the year. 0:13:54.520 --> 0:13:59.599 What are you planning for at the end of the day. Um, 0:13:59.600 --> 0:14:04.240 what we do at Sapphire is striving to back the 0:14:04.280 --> 0:14:09.360 most exceptional entrepreneurs and companies of consequence and regardless of 0:14:09.360 --> 0:14:12.440 what's happening in the markets. Following that north star of 0:14:12.520 --> 0:14:16.079 investing in absolutely the best teams and companies I feel 0:14:16.120 --> 0:14:19.640 will cut through the volatility in the longer term. Now, 0:14:19.680 --> 0:14:22.880 what I'm telling my CEOs are there are certain things 0:14:22.920 --> 0:14:26.040 you can do to protect your business in case the 0:14:26.120 --> 0:14:29.200 fundraising markets tighten up for the rest of the year. 0:14:29.560 --> 0:14:32.560 These are things like making sure that you have enough 0:14:32.640 --> 0:14:35.080 cash on your balance sheet right, taking care of your 0:14:35.080 --> 0:14:38.200 current customers. It costs way more to acquire a new 0:14:38.240 --> 0:14:42.480 customer than to retain an existing customer. And also don't 0:14:42.520 --> 0:14:48.880 forget about retaining your employees as well. Kathy cow Sapphire Ventures, 0:14:48.960 --> 0:14:51.960 thank you for sharing your perspective with us. And now 0:14:52.280 --> 0:14:55.760 that big Apple news hearing it here first, Bloomberg has 0:14:55.840 --> 0:14:58.920 learned the iPhone maker is working on a subscription service 0:14:59.040 --> 0:15:02.000 for the I phone and other hardware products, a move 0:15:02.080 --> 0:15:05.360 that could make device ownership similar to paying a monthly 0:15:05.440 --> 0:15:07.920 app feed is according to people with knowledge of the matter, 0:15:07.960 --> 0:15:10.080 I want to bring in bloombergs Mark German who broke 0:15:10.160 --> 0:15:14.480 this story. Mark, How exactly would this work? Yeah, thank 0:15:14.480 --> 0:15:16.360 you for having me. This would be no different, like 0:15:16.400 --> 0:15:19.520 you said, than your monthly ten dollar Apple Music subscription 0:15:19.920 --> 0:15:23.000 or fifteen dollar month Apple one Bundle subscription. Right, you'd 0:15:23.000 --> 0:15:25.600 be paying for the phone on a monthly basis like 0:15:25.680 --> 0:15:28.320 you might on a car least. Now, this is different 0:15:28.320 --> 0:15:31.600 than installment programs and carry your subsidy programs today. What 0:15:31.800 --> 0:15:33.680 Apple and the carriers allow you to do if you 0:15:33.680 --> 0:15:35.680 don't want to buy the phone out right is split 0:15:35.760 --> 0:15:39.840 up the costs, whether that's two or less for an 0:15:39.920 --> 0:15:43.920 sc in such over twelve, eighteen, four or thirty months, 0:15:43.960 --> 0:15:46.680 depending on your carrier. This would be a set fee 0:15:46.720 --> 0:15:49.560 that's not the cost the phone, divided by you know 0:15:49.600 --> 0:15:52.400 how many months they're already year or two years? So? 0:15:52.640 --> 0:15:56.440 And will this apply to not just the iPhone, but iPads, laptops, 0:15:56.480 --> 0:15:59.800 Apple watches? How far does this go? It'll start with 0:15:59.840 --> 0:16:02.960 the iPhone. Eventually it's possible that Apple will also expand 0:16:02.960 --> 0:16:05.600 it expand it to other hardware as well. Part of 0:16:05.640 --> 0:16:08.520 the program is the ability to upgrade to the new 0:16:08.600 --> 0:16:11.320 model annually as they come out. Just like if you 0:16:11.360 --> 0:16:14.400 have an Apple TV Plus subscription or an Apple Music subscription, 0:16:14.640 --> 0:16:17.360 you're constantly getting new features and content as part of 0:16:17.400 --> 0:16:20.160 that monthly fee you pay. And so there's other devices 0:16:20.160 --> 0:16:21.880 that are also on an annual kaid. It's like the 0:16:21.880 --> 0:16:24.600 Apple Watch, like the iPad and the Mac in some 0:16:24.720 --> 0:16:27.680 respects as well. So I do see this expanding over time, 0:16:27.760 --> 0:16:29.960 and I also believe one day this could become the 0:16:29.960 --> 0:16:33.160 preferred method of buying Apple products instead of having to 0:16:33.200 --> 0:16:36.520 pay you know, those prices at the beginning of the purchase. 0:16:36.560 --> 0:16:39.720 So what does that mean for Apple in terms of revenue? 0:16:39.760 --> 0:16:42.040 I mean, do you see this bringing in you know, 0:16:42.320 --> 0:16:46.200 significantly more revenue of people aren't buying the phones outright, 0:16:46.280 --> 0:16:49.320 but more people spring for that option because they don't 0:16:49.360 --> 0:16:52.560 have to. Well, this is going to be just one option, right, 0:16:52.560 --> 0:16:54.000 There's still a lot of people who are going to 0:16:54.120 --> 0:16:57.400 use the installment plans and installment programs from both Apple 0:16:57.440 --> 0:16:59.520 and the carriers. There's a lot of people who are 0:16:59.520 --> 0:17:01.520 still going to the phone out right. This is going 0:17:01.600 --> 0:17:03.280 to be another option at check out when you go 0:17:03.320 --> 0:17:06.040 to the Apple online store to tie the subscription price 0:17:06.280 --> 0:17:08.280 to your Apple I D I think this is going 0:17:08.359 --> 0:17:11.280 to ultimately increase revenue for Apple because instead of just 0:17:11.320 --> 0:17:14.520 getting a one dollar payment once from a consumer, they 0:17:14.600 --> 0:17:18.720 might get per month for several years, right, and they're 0:17:18.760 --> 0:17:21.400 going to be able to sell those phones over many 0:17:21.480 --> 0:17:24.280 years to consumers and add up to maybe some consumers 0:17:24.320 --> 0:17:26.160 paying three or four ARS a month for a group 0:17:26.160 --> 0:17:28.439 of Apple products and services. So I do think this 0:17:28.520 --> 0:17:30.919 is gonna be a positive for Apple, and it's going 0:17:30.960 --> 0:17:34.640 to mean more upgrades, more services purchases, more app downloads. 0:17:34.680 --> 0:17:37.040 So I think overall this is a smart transition that 0:17:37.080 --> 0:17:38.960 you're going to see happening. And they're not the only 0:17:38.960 --> 0:17:41.479 one doing this, right. Google has a program called Pixel 0:17:41.520 --> 0:17:44.720 pass Right, which is a subscription program for a combination 0:17:44.760 --> 0:17:48.040 of their device and their services. Obviously, their devices nowhere 0:17:48.119 --> 0:17:50.600 near as popular as the iPhone, but they're trying it. 0:17:50.880 --> 0:17:55.439 Peloton as well. Peloton is testing a six monthly fee 0:17:55.480 --> 0:17:58.919 for leasing their bikes. Obviously Peloton is not doing as 0:17:58.920 --> 0:18:01.600 well as Apple, but again, these are examples of other 0:18:01.640 --> 0:18:06.080 companies moving in the same direction. When is this transition happening? 0:18:06.119 --> 0:18:09.600 Why can people do this? So they have been working 0:18:09.600 --> 0:18:11.880 on this for a little while now. It was originally 0:18:11.880 --> 0:18:14.080 scheduled to launch sometime this year, at the end of 0:18:14.080 --> 0:18:16.440 this year, so probably between the end of this year 0:18:16.440 --> 0:18:19.840 and sometime next year. And how quickly do you expect 0:18:19.880 --> 0:18:22.840 Apple to ramp something like this up move from say 0:18:22.960 --> 0:18:27.400 an iPhone to other hardware products, you know, over time, right, 0:18:27.440 --> 0:18:28.879 I think it will start out if it works so 0:18:28.960 --> 0:18:31.399 with the iPhone. If they continue to generate more revenue 0:18:31.400 --> 0:18:33.600 on the iPhone and they work without this program, then 0:18:33.640 --> 0:18:36.679 you probably would see this, you know, rapidly expanding. I 0:18:36.720 --> 0:18:39.919 think it will be iPhone focused iPhone first. Given there 0:18:39.960 --> 0:18:42.920 are so many installment and carrier plans, even Apple's own 0:18:42.920 --> 0:18:47.159 iPhone upgrade program, Apple's Apple Card monthly installments program with 0:18:47.240 --> 0:18:49.439 Goldman sacks to the phone. So I think they're just 0:18:49.440 --> 0:18:52.560 continuing to add different purchasing options for the iPhone to 0:18:52.640 --> 0:18:54.800 make it appealing to more and more people. So I 0:18:54.800 --> 0:18:57.040 think it'll be iPhone focus for at least a little while. 0:18:58.320 --> 0:19:01.600 Bloomberg's Mark German scoop Mark, thank you for bringing that 0:19:01.640 --> 0:19:13.160 to us. Welcome back to Bloomberg Technology. I'm Emily Chang 0:19:13.160 --> 0:19:16.639 in San Francisco. We're still assessing the fallout of employees 0:19:16.680 --> 0:19:19.560 pushing back and walking out on Disney after CEO Bob 0:19:19.640 --> 0:19:22.760 Japeck initially refused to take a position on a controversial 0:19:22.840 --> 0:19:26.199 Florida bill, then changed course. One of my next guests 0:19:26.200 --> 0:19:29.520 says Bob j Peck needs to go, calling him the 0:19:29.520 --> 0:19:33.439 worst Disney leader he can remember, adding that the company 0:19:33.480 --> 0:19:36.760 needs to bring back former CEO Bob Iger. Joining me 0:19:36.800 --> 0:19:39.200 now the man who said that, Ross Gerber, president and 0:19:39.240 --> 0:19:42.359 CEO of Gerber Kawasaki and a Disney investor. I'm also 0:19:42.400 --> 0:19:45.040 joined by Ivan fine Set, chief investment officer of Tiger's 0:19:45.080 --> 0:19:47.840 Financial who has a BY rating and twelve month price 0:19:47.920 --> 0:19:51.080 target of two dollars a share on Disney, which is 0:19:51.160 --> 0:19:55.639 the highest of all analysts tracked by Bloomberg. Gentlemen, thank 0:19:55.680 --> 0:19:57.679 you so much for joining us. Ross, I want to 0:19:57.680 --> 0:20:00.200 start with you. Why are you so disappointed in Bob 0:20:00.480 --> 0:20:04.800 Peck so far? Well, first, it started with Starlett Johannesson, 0:20:04.960 --> 0:20:06.680 you know, when he first took over, and the way 0:20:06.720 --> 0:20:11.159 he was handling talent was just horribly done to ultimately 0:20:11.400 --> 0:20:13.720 end up giving her the same amount of money anyways, 0:20:13.720 --> 0:20:16.840 And and when you start ruffling feathers with the most 0:20:16.880 --> 0:20:20.679 talented people in your you know, movie business, that that 0:20:20.760 --> 0:20:22.840 doesn't make sense. And then now we've moved on to 0:20:22.920 --> 0:20:26.920 political issues, where Disney has always had a long history 0:20:27.000 --> 0:20:30.600 of liberalism and and sort of educating our society about 0:20:30.680 --> 0:20:34.720 liberalism through movies and shows and animation. Um for so 0:20:34.760 --> 0:20:38.680 long we we expose our children to new ideas through Disney. 0:20:38.760 --> 0:20:42.399 So I found it incredibly poor leadership that an issue 0:20:42.440 --> 0:20:44.800 as simple as the one in Florida was one that 0:20:45.359 --> 0:20:48.359 you know, Cha Peck waffled on. And it's something that's 0:20:48.600 --> 0:20:52.840 crucially important in our society today that we have more 0:20:52.880 --> 0:20:56.840 acceptance of of all people, and Disney stands for that. 0:20:56.960 --> 0:20:59.320 So the fact that this was a difficult issue for 0:20:59.440 --> 0:21:02.320 Chapec to deal with really just makes me doubt his 0:21:02.359 --> 0:21:05.959 ability as a leader. He should just be an operations person. 0:21:06.160 --> 0:21:07.919 And that's what I missed about Bob Iger. He was 0:21:07.960 --> 0:21:11.359 such a class act. He was such a gentleman and 0:21:11.560 --> 0:21:15.160 mensch um and and just always made Disney look good 0:21:15.200 --> 0:21:18.280 no matter how difficult the situation is. And I'm biased 0:21:18.320 --> 0:21:20.040 because I'm a big fan of Bob Iger and I 0:21:20.040 --> 0:21:22.640 miss him, but you know, i'd love to see him back. 0:21:24.320 --> 0:21:26.600 I didn't. What's your reaction to that, given that you're 0:21:26.640 --> 0:21:29.440 clearly bullish, You've got such a high price target here, 0:21:29.520 --> 0:21:33.320 and you must I believe believe Bob J. Peck is 0:21:33.359 --> 0:21:37.160 doing a good job. I do. First of all, he 0:21:37.280 --> 0:21:40.480 became CEO and right as we were going into the 0:21:40.480 --> 0:21:44.560 pandemic lockdown where travel was shut down, movie studios where 0:21:44.800 --> 0:21:48.440 production was shutdown, theaters were shutdown, cruise lines were shutdown, 0:21:48.440 --> 0:21:50.520 and the parks were shut down. And he did a 0:21:50.560 --> 0:21:55.680 great job stewarding the company um saving cash, cutting expenses 0:21:56.560 --> 0:22:01.080 and investing in the expansion and increased content for Disney 0:22:01.119 --> 0:22:03.879 Plus and their directed to consumer streaming services. So he 0:22:03.920 --> 0:22:06.840 has gone through a really difficult time. I agree with 0:22:06.960 --> 0:22:09.520 Ross that Bob Iger was a great CEO, but I 0:22:09.600 --> 0:22:14.640 don't agree that UH in this unfortunate time that Bob J. Peck. 0:22:14.840 --> 0:22:17.200 I think he did a great job. And he said 0:22:17.240 --> 0:22:20.199 in his note to chare all two employees, if he 0:22:20.280 --> 0:22:24.639 took a hard stance either on either side of this position, 0:22:25.200 --> 0:22:27.679 that it would be used as a political weapon. And 0:22:27.720 --> 0:22:31.159 I agree. And Disney is a company that that leads 0:22:31.280 --> 0:22:35.679 UH in a lot of areas, especially in acceptance, but 0:22:35.760 --> 0:22:38.880