Speaker 1: Well, acky, here we are the final days of two
Speaker 1: thousand sixteen, the year of Brexit, the election of Donald Trump,
Speaker 1: the year we lost Prince and David Bowie. I mean,
Speaker 1: I think as a journalists we did such a terrible
Speaker 1: predicting what would happen this year? And gosh, is it
Speaker 1: even worth trying to think about what might happen next year?
Speaker 1: Maybe the problem is in these predictions were too optimistic.
Speaker 1: We look for the things that we want to see happening. Well,
Speaker 1: how about this, how about we think about the worst
Speaker 1: possible things that could happen next year and beyond, and
Speaker 1: we prepare ourselves for the that worst case scenario that's
Speaker 1: really grim. I like it that. Let's do it. Hi,
Speaker 1: I'm brad Stone, and I for our final episode of
Speaker 1: two thousand sixteen, we bring you the Bloomberg Pessimus Guide
Speaker 1: Global Technology Edition for two thousand seventeen. These are the
Speaker 1: most dire doomsday scenarios are reporters could come up with
Speaker 1: the things that might happen in the world of tech.
Speaker 1: Hopefully not if it all goes terribly wrong. Okay, So
Speaker 1: buckle in and grab some tums to settle that ominously
Speaker 1: grumbling stomach. Or maybe that shouted tequila. Actually, we should
Speaker 1: have a bottle of tekula with us. Now, Well, the
Speaker 1: US is still digesting the shock eleection of Donald Trump.
Speaker 1: So let's start with the potential for doom and gloom
Speaker 1: in Washington, d C. And bringing us that scenario is
Speaker 1: Josh Brustein. He's our reporter in New York and he's
Speaker 1: on the line with us. Hey guys, Okay, Josh, so
Speaker 1: scare the heck out of us. What do you have
Speaker 1: for two seventeen? Well, the great thing um for a
Speaker 1: pessim us in seventeen and the surveillance realm, is that
Speaker 1: there's plenty to be terrified about. Whether your main fear
Speaker 1: is mass surveillance or whether your main fear is the
Speaker 1: intelligence agencies of the United States being being hampered in
Speaker 1: some way or another. That is a perfect pessimas. Okay,
Speaker 1: So there has been this ongoing debate over over the
Speaker 1: Vice Acts, the Foreign Intelligence Surveillance Act. What do you
Speaker 1: think Trump is likely to do with this law? Yeah,
Speaker 1: I mean, I think the thing is that nobody knows
Speaker 1: and that makes people very nervous. This law has been
Speaker 1: very controversial. A major part of it is going to
Speaker 1: come up for renewal, and if it's not renewed by
Speaker 1: the end of the year, it just goes away. And Jess,
Speaker 1: is that a bad thing? Though it is seen as
Speaker 1: a very bad thing. If you are in the intelligence community,
Speaker 1: if you're in the a c. L U or the
Speaker 1: Electronic Frontier Foundation UM or your privacy advocate, then you
Speaker 1: actually kind of might welcome this. They have a website
Speaker 1: where they're actually counting down to the expiration of US
Speaker 1: Section seven two. Of course, Trump as a candidate, you know,
Speaker 1: was for forms of torture. I mean, it does suspect
Speaker 1: that he will push these things to the limits. So
Speaker 1: what does what does it mean not just for privacy
Speaker 1: of of Americans, but for you know, the u S
Speaker 1: relationship with its allies in Europe and the and the
Speaker 1: status of American Internet companies abroad. Yeah. Absolutely, so if
Speaker 1: Trump is more aggressive with surveillance, something you could do
Speaker 1: even aside from this law, because the president has a
Speaker 1: lot of power just to start claiming just start claiming
Speaker 1: authority under executive orders, and the if he starts being
Speaker 1: more aggressive or is suspected of being more aggressive, because
Speaker 1: it's a possibility that we wouldn't really know what's going on.
Speaker 1: You could see europe uh start to put pressure on
Speaker 1: American companies. We've already seen a lot of skepticism about
Speaker 1: whether American companies can protect the information they have against
Speaker 1: the U. S. Government, and that could become a bit
Speaker 1: of a hot button issue for European governments in Silicon Valley. Okay, Josh, well,
Speaker 1: thanks for bringing that to us today. Absolutely, thank you.
Speaker 1: All right, So, how are you feeling so far? Acky? Uh?
Speaker 1: I really wish we brought that bottle of tequila here. Okay,
Speaker 1: So let's move away from the federal government now and
Speaker 1: take a look at blue chip tech companies. Alex, you
Speaker 1: are our Apple reporter and you're here with us here
Speaker 1: in San Francisco. Hi. So, Alex, welcome to the Bloomberg
Speaker 1: Technology Pessimist Guide, where we're doing our best to ruin
Speaker 1: everyone's day. So tell us what's the worst thing that
Speaker 1: could happen to Apple in two thousandev So Apple could
Speaker 1: lose its credit rating, and this has huge implications for
Speaker 1: a company which has succeeded in keeping shareholders happy by
Speaker 1: rewarding them with cash in recent years while they've been
Speaker 1: waiting for the next blockbuster product to plump up the
Speaker 1: share price Simco, the CEO has sold debt in order
Speaker 1: to fund buybacks and dividends and keep investors pockets plot flush.
Speaker 1: What about iPhone sales? So they continue to prop up
Speaker 1: the company. So iPhone sales are still pretty healthy, but
Speaker 1: they are falling and flattening. Um. So you know, there's
Speaker 1: been at the first revenue decline in over a decade
Speaker 1: in the most recent fiscal year. So the expectation is
Speaker 1: one hopes that the iPhone coming next year will be
Speaker 1: a real blockbuster product. But if for some reason it
Speaker 1: isn't and it's vastly disappointing and it doesn't encourage and
Speaker 1: huge new fresh burst of sales, then that could be
Speaker 1: a problem for Apple. All right, So we should remember
Speaker 1: that Apple is the world's biggest technology company, actually the
Speaker 1: world's biggest company period. So if credit agencies suddenly decide
Speaker 1: that Apple is no longer credit worthy, that's going to
Speaker 1: have implications for every other tech company out there, every
Speaker 1: other publicly traded company in the world. It is something
Speaker 1: that could also have implications for someone like Microsoft. Now
Speaker 1: the is an Apple raises this debt is because while
Speaker 1: it has vast amounts of cash in the bank, most
Speaker 1: of it is offshore. Of the two billion in cash
Speaker 1: reserves that it has, two six billion dollars of that
Speaker 1: is outside the US. In order to repatriate that money,
Speaker 1: Apple has to pay a thirty five pc tax rate
Speaker 1: in the US, which is clearly great news for the Treasury,
Speaker 1: but not such great news for Apple itself. There is
Speaker 1: hope that in Congress they will pass some legislation which
Speaker 1: will reduce that tax bill, which increases the likelihood and
Speaker 1: that Apple's willingness to repatriate money from off shore that
Speaker 1: would essentially reduce their need to sell debt in order
Speaker 1: to reward the shareholders and come up with that sort
Speaker 1: of Donald Trump has signaled the willingness to do that, yes,
Speaker 1: and it's been one of his big campaign pledges that
Speaker 1: would help spare investment in the US. So there is
Speaker 1: a real appetite to make that happen in the new
Speaker 1: White House. Is there a chance where we might see
Speaker 1: another miracle product category spring from Cooper Tino that averts
Speaker 1: this worst case scenario. I mean, that's the question every
Speaker 1: investor in the world is asking. We know they've looked
Speaker 1: at cars, they've broadly scrapped the Apple s hardware part
Speaker 1: of the car project that they're still carrying on with software.
Speaker 1: We think they're exploring some things in glasses. We've reported
Speaker 1: that maybe something in healthcare. We don't quite know what
Speaker 1: that is, maybe just some sort of healthcare platform. They're
Speaker 1: investigating a lot of avenues, but we're yet to see
Speaker 1: anything concrete surface just yet. All right, so we just
Speaker 1: asked you to tell us the worst case scenario. But
Speaker 1: how likely is it? I was speaking to the Moody's
Speaker 1: analyst who looks at this staff as his job, and
Speaker 1: he said that if Apple continues to raise debt at
Speaker 1: a faster pace than it's cash balance increases, then this
Speaker 1: could happen within eighteen months. One hopes that the blockbuster
Speaker 1: new iPhone next year renders such a likelihood impossible, but
Speaker 1: we'll have to look and see. All right, Alex Webb,
Speaker 1: thank you for contributing to the dark mood in the studio.
Speaker 1: We appreciate it. Happy Christmas, sorry I should say Holidays
Speaker 1: in New Yestian so Akey, who's up next? We are
Speaker 1: now going from the blue chips to the unicorns, and
Speaker 1: specifically we're going to talk about the worst thing that
Speaker 1: could happen to Uber, which is now the world's biggest
Speaker 1: private technology company. And we have Eric newcomer here in
Speaker 1: San Francisco. Eric, Eric, Hey, thanks for having me. All right,
Speaker 1: so scare us. What could possibly happen to our beloved Uber?
Speaker 1: You know, what what if? What if the unicorn with
Speaker 1: the biggest private valuation in the world sixty nine billion
Speaker 1: dollars saw its valuation fall? I mean, this is a
Speaker 1: company that's been built around sort of the ever growing
Speaker 1: rise of that that number. We've just watched it. When
Speaker 1: it was three billion, we thought it was crazy and
Speaker 1: up and up and up and up. You know, there
Speaker 1: are no short sellers against it. It's it's a number
Speaker 1: that's climbed. So what happens if it falls? So who cares? What?
Speaker 1: What would be the impact of that? The problem is
Speaker 1: one for Uber morale would be heard. Some employees would
Speaker 1: see their stock compensation fall dramatically. A lot of them
Speaker 1: have sort of counted on that is why they're working
Speaker 1: there and not sort of the lush offices of Google. Uh.
Speaker 1: Uber's reputation would fall. You know, it's been this gigantic titan.
Speaker 1: But I think you know the problems for Uber aside
Speaker 1: it would be a bad sign for Silicon Valley. This
Speaker 1: is a valuation that towers above all other ones. It
Speaker 1: sort of sets the brominter for what companies should be worth.
Speaker 1: If Uber's value is misguided, then I think a lot
Speaker 1: of other companies are gonna have to question how much
Speaker 1: their worth and that could have broad implications for you know,
Speaker 1: not just these technology workers, but also the broader San
Speaker 1: Francisco economy too. Right, maybe housing prices would come down
Speaker 1: to Well, that's a good point. I mean, would a
Speaker 1: decline in unicorn valuations be good for some people presumably
Speaker 1: incumbents and everyone that these unicorns have been able to
Speaker 1: use a flood of cheap money to sort of suppress
Speaker 1: I mean, Uber has helped drown out the taxi cab market. Here.
Speaker 1: If it turned out Uber was operating on margins that
Speaker 1: were unsustainable, had to raise its margins, heard its valuation,
Speaker 1: lower its market share, that might see we might see
Speaker 1: a resurgence in taxi cabs, or maybe Uber sort of
Speaker 1: steamrolled too many of them to really make a strong comeback.
Speaker 1: I mean, it really is hard to imagine Uber making
Speaker 1: money off of these uberpool routes. I mean they are
Speaker 1: so cheap. Yeah, for Uber. It's all about volume, drive
Speaker 1: price to the bottom, and then expand into pool, expand
Speaker 1: into food delivery. So they know the margins are going
Speaker 1: to be pretty thin, but they just need to do
Speaker 1: a lot of them. Let me see this though, as
Speaker 1: a consumer, I think the worst case scenario for me
Speaker 1: would be for Lift to go out of business and
Speaker 1: for Uber to have a complete monopoly over the San
Speaker 1: Francisco market and check out prices like crazy and make
Speaker 1: my transportation costs spike. I think that's a fair point.
Speaker 1: Lift has about a billion dollars in the bank probably
Speaker 1: and is slowly spending down that money, and maybe you know,
Speaker 1: about six million dollars a year or less, so it
Speaker 1: has some time to figure it out. But at some
Speaker 1: point there's a ticking time bomb for Lift to figure
Speaker 1: out how it gets more money, goes public, gets money
Speaker 1: from those investors, or gets bought and has somebody subsidized
Speaker 1: their business. Okay, taking time bombs, Thanks for unsettling us further, Eric,
Speaker 1: Good job, Brad. Are you ready for the next one?
Speaker 1: There's more? I feel like I need to go get
Speaker 1: some anxiety medication. Well, this one is particularly scary. Lizette Chapman,
Speaker 1: you are our venture capital reporter here in San Francisco,
Speaker 1: and you're going to tell us about how personal health
Speaker 1: data could be collected against our will and used against us.
Speaker 1: What do you mean could be collected? It is being
Speaker 1: collected right now, and we're volunteering it. Everybody has not everybody,
Speaker 1: but like sixty million plus people have absolutely fallen in
Speaker 1: love with all of these different wearable devices with different
Speaker 1: sensors on it that track our steps that you know,
Speaker 1: track our sleeping, and sensors are getting better and better.
Speaker 1: So what's the problem. I thought all this was supposed
Speaker 1: to make us feel healthier. It's true, a lot of
Speaker 1: people have improved their health because they're able to quantify
Speaker 1: how their habits range day to day and even sometimes
Speaker 1: compete with their friends. The problem is that a lot
Speaker 1: of people are just volunteering this information. You're not even reading,
Speaker 1: you know, kind of like the terms and conditions when
Speaker 1: you download an app. You just click it and move on. Well,
Speaker 1: that could be a problem going forward. But how much
Speaker 1: data can these insurers or employers really get out of
Speaker 1: the number of steps we take every day? We'll see,
Speaker 1: But that's just it. It's not just about steps anymore.
Speaker 1: I mean now sensors are becoming so cheap and so
Speaker 1: much better than they have been in past years that
Speaker 1: they're able to monitor everything from blood oxygen levels to
Speaker 1: heart rate to to you name it, it, just like
Speaker 1: you would in a doctor's appointment. So the worst key
Speaker 1: scenario is these insurers might use this against us that
Speaker 1: you know, they'll see the number of steps we're taking,
Speaker 1: our heart rate, our blood oxygen levels and say, maybe
Speaker 1: this person has a good chance of getting heart disease
Speaker 1: down the road. It could happen. We're volunteering this information.
Speaker 1: I haven't seen any legislation saying hey, you know, uh,
Speaker 1: you know, don't reach out to these different customers because
Speaker 1: it hasn't happened yet. They're not they haven't made the
Speaker 1: connection yet between this massive trove of data that's being
Speaker 1: generated every day by Americans to um to health insurance policies. Yet,
Speaker 1: just earlier this year, ETNA UM gave out fifty thousand
Speaker 1: Apple watches to their employees so they can start working
Speaker 1: on a joint venture with Apple to figure out how
Speaker 1: to use the data. So I think it's might be coming.
Speaker 1: That sounds scary. Does the potential repeal of the Affordable
Speaker 1: Care Act Obamacare does a factor into this legal ambiguity
Speaker 1: that might allow insurance or healthcare companies to penalize us
Speaker 1: for unhealthiness. Perhaps it's kind of mes you know, you
Speaker 1: look at that, that's kind of a big, hot red
Speaker 1: mess right now. I think the larger point that that
Speaker 1: you're getting at, I think is a good one, which
Speaker 1: is that you know, health insurance is broken right now
Speaker 1: and they're looking for new revenue streams. There's high cost,
Speaker 1: low satisfaction um with the big data, the use of
Speaker 1: big data, this is a new revenue stream and if
Speaker 1: you think about it, you know we're just giving it away.
Speaker 1: It's kind of like when you download an app and
Speaker 1: you just agree to terms and conditions. Well, thanks for
Speaker 1: sharing that with us today, Lizette Brad. I think it's
Speaker 1: time for you to kick it off my Apple Watch
Speaker 1: right now, at least change your privacy settings on your tracker. Well,
Speaker 1: I'm going for a run. So this brings us to
Speaker 1: our very last scenario of ready for one more bread?
Speaker 1: Probably not, but let's do it. This one, you could say,
Speaker 1: has been long overdue. Here's Dina Bass calling in from Seattle. Hey, DNS,
Speaker 1: what have you got for us? So? My scenario is
Speaker 1: that the a group of hackers working for a hostile
Speaker 1: nation state or a stateless entity like a terrorist, scre criminals,
Speaker 1: or hacked of US will hack into the industrial systems
Speaker 1: at UM some critical infrastructure, say a power plant or
Speaker 1: a damn public transport. They will tweak the software too,
Speaker 1: in a manner that shuts down or destroys the hardware
Speaker 1: and damaging the facility. Yeah, this sort of thing has
Speaker 1: been possible for a while. I'm thinking of that attacked
Speaker 1: by US and Israeli hackers on an Iranian nuclear facility
Speaker 1: a few years ago with the stuck snet virus. Yes, absolutely,
Speaker 1: that's exactly what they did there. They used a virus
Speaker 1: to basically speed up the way the center fugees in
Speaker 1: the reactor we're spinning and damaged um um. And you know,
Speaker 1: the US government has been doing some tests going back
Speaker 1: as far as two thousand seven, if you look at
Speaker 1: Fred Kaplan's book, where they were trying to see whether
Speaker 1: a remote programmer in d C could take out a
Speaker 1: twenty seven ton power generator all the way across the
Speaker 1: country in Idaho. And of course it took just twenty
Speaker 1: one lines of code to send the generator to an
Speaker 1: untimely death. That's incredible. I mean, one of our previous
Speaker 1: podcast episodes was about how these hackers in Russia managed
Speaker 1: to penetrate the Democratic now stional committees email servers and
Speaker 1: they were able to read quite a bit of havoc
Speaker 1: on the election campaign cycle. So if they were able
Speaker 1: to hack emails in this way, he really makes you
Speaker 1: think what happens if they actually hack physical infrastructure that
Speaker 1: could put real lives in danger. Sure. Absolutely, we've had
Speaker 1: a couple of, you know, examples of that around the world. Also,
Speaker 1: there was hacking of of a damn in Westchester, New
Speaker 1: York that was attributed to the Iranians. In we had
Speaker 1: was sort of the first reported takedown of an electrical
Speaker 1: power grid in Ukraine. Uh And the point you make
Speaker 1: about the d n C hack is a good one
Speaker 1: as well, because that that happened with you know, as
Speaker 1: far as we know, not a lot of repercussions, and
Speaker 1: you know, my sense is that that could embolden people
Speaker 1: in twenty s to try something more seriously. Well, Dina,
Speaker 1: considering all these very public instances, how prepared our computer
Speaker 1: security experts for these kinds of attacks? So it's gotten.
Speaker 1: Things have gotten better than stucks net. You know, companies
Speaker 1: like Semens, which was theo that have made the controls
Speaker 1: that were impacted in Iran, have worked to harden their systems.
Speaker 1: They now go in and signed contracts with these companies
Speaker 1: to go in and update the systems more frequently. But
Speaker 1: you know, there's still a fair amount of issues. Just
Speaker 1: last week, there's a Presidential Commission on Enhancing National Cybersecurity
Speaker 1: and put they put out a report and a number
Speaker 1: of the recommendations were related to these issues of defending
Speaker 1: key infrastructure um, you know, and also they talked about
Speaker 1: coming up with clear ideas of who does what and
Speaker 1: you know, to respond to these kinds of attacks, and
Speaker 1: what are the rules of engagement for state and local governments,
Speaker 1: for the for the federal government, and also for private
Speaker 1: companies who are are going to be helping out to protect.
Speaker 1: And of course, as we bring more and more of
Speaker 1: our systems connected to the Internet, the stakes are only
Speaker 1: getting higher. Yeah. Absolutely, that was something that was flagged
Speaker 1: by the Commission as well, and they were talking about,
Speaker 1: you know, our cyber and physical worlds increasingly converge. You know,
Speaker 1: earlier this year we saw that massive distributed denial of
Speaker 1: service attack that took down a decent chunk of the Internet,
Speaker 1: and that was basically, you know, people, the Internet was
Speaker 1: attacked via webcams and and DVRs. It's great that we
Speaker 1: have all of these Internet of things devices, but they're
Speaker 1: now on networks that are connecting or can connect in
Speaker 1: certain ways to our critical infrastructure, which is another thing
Speaker 1: this Presidential Commission brought up. These two things are converging
Speaker 1: the largely unsecured world of Internet of things devices and
Speaker 1: our critical infrastructure. Well, let's keep our fingers crossed. None
Speaker 1: of this is making me feel any better. Thanks for
Speaker 1: that prediction, Dina, Thank you. How are you feeling, Hockey?
Speaker 1: I don't know. I don't know if I'm ready for
Speaker 1: twenty Neither apard the Optimist Guide the two after this episode.
Speaker 1: Oh my gosh, I know, what's your worst case scenario,
Speaker 1: brad Well. I mean, everyone gave gave me a lot
Speaker 1: of food for thought here, you know. The one that
Speaker 1: I contributed to the larger Bloomberg Pessimist Guide was that
Speaker 1: we would find out that the law enforcement authorities were
Speaker 1: wire tapping some of these passive listening devices like the
Speaker 1: Amazon Echo or even some of our phones that are
Speaker 1: kind of waiting for these watchwords like Hello, Google or Alexa.
Speaker 1: You know, can they just turn those on and listen?
Speaker 1: And if they do do that and or may be
Speaker 1: able to, you know, to to amass some intelligence on
Speaker 1: some bad guys. But what is it due to the
Speaker 1: overall trust in these devices that are now populating our lives?
Speaker 1: That's my question for two thousand and seventeen. How about you, well,
Speaker 1: how about this? How about I reject the premise altogether
Speaker 1: because I'm feeling terrible right now, and I give you
Speaker 1: an optimist prediction next year. All right. So I was
Speaker 1: talking to our biotech reporter Caroline Chen earlier, and she
Speaker 1: was telling me about, um, all these really incredible advances
Speaker 1: that doctors, researchers, biotech companies are making right now in
Speaker 1: this in the few yild of cancer research. UM. Apparently
Speaker 1: there's a new method called immunotherapy where instead of using
Speaker 1: radiation to just kill off entire parts of your body, right, UM,
Speaker 1: you can go in UH and implement this really targeted
Speaker 1: form of therapy that makes your immune system attack the
Speaker 1: cancer cells. And so far in university labs and the
Speaker 1: biotech research labs, UH they're producing a lot of really
Speaker 1: good results. That sounds very promising. It's two thousand seventeen,
Speaker 1: the year when I make a difference in patients lives. Well,
Speaker 1: let let's see. It sounds like I'm some therapies are
Speaker 1: up for FDA approval right now, so they could become
Speaker 1: widely available pretty soon. And you know, maybe they wouldn't
Speaker 1: cure cancer altogether, maybe they wouldn't be able to prevent it,
Speaker 1: but maybe it could make cancer this form of chronic
Speaker 1: disease that you live with for the rest of your life,
Speaker 1: kind of like kind of like AIDS. So a very
Speaker 1: nice optimistic prediction to end to end our podcast today,
Speaker 1: and that's it for this year on the Decrypted Podcast.
Speaker 1: Thanks for listening. We're going to take a short break
Speaker 1: for the holidays next week, but we'll be back with
Speaker 1: a full slate of new episodes starting on January ten.
Speaker 1: If you have an iPhone, please subscribe on your native
Speaker 1: podcast app and leave us a rating and review there.
Speaker 1: It helps more listeners discover the show and tell us
Speaker 1: what you think could be the worst possible thing that
Speaker 1: could happen in I'm on Twitter at Akio seven and
Speaker 1: I'm at Brad Stone. This episode was produced by Pied Good,
Speaker 1: Cary Magnus, Henrickson, and Liz Smith, with help from Aaron Plack.
Speaker 1: Alec McCabe is head of Bloomberg Podcasts. We'll see you
Speaker 1: next year, Happy New Year, Land Land