Transcripts For BLOOMBERG Best Of Bloomberg Technology 20240714

Kicks off the discussion on how facebook and google are challenging the news industry. We will hear from a top lawmaker who does not think big is necessarily bad. But first, to our top story. Apple has a backup plan if the u. S. China trade war continues to escalate. The companys manufacturing partner says it is able to make all iphones bound for the u. S. Outside of china if necessary. Hon hai now makes most of apples smartphones at its chinese factory. Our bloomberg tech editor Alistair Barr joined vonnie quinn with the details. Alistair this is an executive who was talking to investors and other people in taiwan, and our reporter in asia, debbie wu, was there to listen. And this is more of a plan. The executive did not say apple asked foxconn to do this yet, but he was saying they are very capable of doing it. It has raised a lot of questions. We spoke to an analyst over here who looks at the smartphone industry, and he was saying that if youre talking about actual final assembly, which is a lot of what foxconn does, putting together all the components in an iphone if you are talking about that, that might be relatively easy to move. If you are talking about the whole manufacturing process for an iphone, that would probably be a lot harder. Vonnie its interesting, because we know that politically china and taiwan are a little bit at odds. Is there any danger that china would retaliate against hon hai if this were to happen, if apple were to move all of its production to the Taiwanese Company . Alistair yeah, that is a very good question. Apple has got to be very careful in general with this type of thing. Some of the activities that are going on with huawei in the u. S. , where the u. S. Government is Encouraging Companies and consumers to steer clear of huawei, that has really raised concerns about what happens to the treatment of apple in china. So, there has been a lot of concerns that there would be kind of an unofficial recommendation that chinese consumers not buy iphones and buy something else. And that market is still really, really important for apple. So it is a big risk. Vonnie hon hai, of course also known as foxconn, had a plan for a wisconsin plant that would have employed 13,000 people. Does its plan for wisconsin change materially at all, alistair . Alistair actually, this executive who was speaking yesterday, he seemed pretty bullish about the wisconsin plant, and he kind of placed it in the same type of strategic realm as this idea that you could move the iphone assembly out of china. And also india, india is something to consider, too. Foxconn has plants in india already, and it was dealing with similar types of restrictions from the indian government. So it certainly does have a lot of options around the world. Emily bloomberg techs Alistair Barr there. Well, the recent wave of antitrust scrutiny by the u. S. Government is not stopping salesforce from gobbling up the competition. This week, the Sales Software giant agreed to buy Tableau Software for more than 15 billion. Seattlebased tableau helps customers turn raw data into easily understandable dashboards and charts. The move is expected to give salesforce even more ways to help its customers analyze data. Tableau is salesforces biggest acquisition to date, and it means they have now bought more than 60 companies in the last two decades. For reaction, we were joined by a Senior Analyst from sanford bernstein, and our correspondent from bloomberg tech. This makes a ton of sense for both companies. Tableau has really been moving upmarket up into the enterprise customers, and they have always had the best r d, the best products. But what they lacked, really until the new ceo showed up a couple of years ago, was an enterprising inner sales force. Existing enterprise relationships. The salesforce, very large ecosystem, massive capacity for driving sales through their sales and marketing ecosystem. It is really a huge landgrab opportunity for salesforce to cross tableau into their existing customer base. And it also makes a lot of sense for the two companies in terms of their mission. Both Companies Want to use data and information to digitize companies, help customers go through a digital transformation. And the challenge salesforce has really had in my view is not having the existing systems outside of their crm to look into the other silos in large enterprises, and tableau can really provide that. Emily adam felicity, the ceo formerly of amazon. That said, their analyst out there thinks this is not one of salesforces core competencies, it does not help expand the core business. Of course, you have got other competitors out there like google, which just bought looker. Talk to us about the range of reactions. Yeah, so, it really has been diverse. Microsoft has been out there with power v. I. , and they have just been very dominant. Particularly because they can Sell Cloud Services and sell power v. I. At the same time. One analyst has told me that in her opinion, microsoft has been eating tableaus lunch. You know, there are some people who think that the deal is quite expensive, a 42 markup from tableaus market cap at the close on friday, but others say look, all Software Stocks are valued pretty richly these days. I think, you know, what it shows is that marc benioff is not afraid to continue to buy the companies that he covets. He said he was interested in this company for a long time. And as you said, even in this antitrust landscape, salesforce is really benefiting because it is not on the governments radar. The Enterprise Market is so competitive, and because consumers are not involved, you know, it does not seem like there is a huge power imbalance between this company and its customers. Emily what do you have to say to the skeptics here . That microsoft was eating tableaus lunch, tableau was about to be in competition with google as well. Now they will be a bit more protected under the salesforce umbrella, but this is not necessarily additive to salesforces current product. So i think the skeptics will say a couple of things. That this was a defensive move on the part of tableau. I do not think that is true. In q1, tableau landed a 100,000 seat deployment with a large retailer. There are only a few retailers that could be, ostensibly walmart. So if you are landing customers like walmart, they also have exxon mobil, facebook some of the most advanced companies are already using tableau at scale instead of the microsoft power v. I. Product. So i think that shows the strength of their solution. And the win rates from all of our customer conversations, they have remained strong and they are growing the recurring revenue almost 40 a year with the transcription. Some will say this is expensive, but if you look at the mulesoft acquisition, i believe that was 16 times forward sales, i believe this is about 10 times forward sales for tableau. So you could argue that for something growing recurring revenue almost 40 a year, they could have even paid more. I think this is a really valuable asset, because without being able to look into all of the different silos where enterprises have their data stored, it is really impossible to digitize a company or go through a digital transformation. So i do think while it is outside the core competency of salesforce, it is going to be very synergistic in terms of what they want their customers to do. Emily mulesoft another big acquisition, but not quite as big. Tableau also has customers like verizon and netflix. Put this in the context of salesforces other acquisitions, not all of which have panned out. Yeah, so, you know, there have been some products that not waived, the old Analytics Tool is something that salesforce admits was a flop. But i think it really shows that salesforce has been on this trajectory of moving from Customer Relationship powerhouse to a bit more of a generalpurpose Information Technology company. Emily bloombergs nico grant and zane crane of sanford bernstein. Coming up, the year of the tech ipo continues. We will talk to crowd strikes Ceo George Kurtz about going public, next. And if you like bloomberg news, you can check us out on the radio, the bloomberg app, online and on sirius xm. This is bloomberg. Emily the year of tech ipos continues. Shares of Cyber Security Company Crowdstrike soared in their first day of trading, wednesday. The stock jumped as much as 97 at one point in the session. Crowdstrike raised 612 million in an ipo, giving the company an 11. 4 billion market cap. Crowdstrike Ceo George Kurtz joined us from the nasdaq. George well, i think at crowdstrike, we are really focused on going public when we were ready. And from our perspective, we have always taken a longterm view. And today is one day where we raised a financing round, and we are going to continue to focus on the future. So, i think we should look back on today and celebrate it, but tomorrow we are back at it. And focusing on Customer Success and preventing breaches for large and Small Companies around the globe. Emily how much are you following whats happening globally . And how much exposure do you have to china . George we dont really sell in china, so that, you know, has not really affected us. I think from a china perspective, we typically see a lot of activity around geopolitical tensions. And that activity tends to manifest itself in cyberattacks. So, with some of this unrest, we continue to see nationstate attacks, and again, why we started the company was to help as asians around the globe against these determined adversaries and nationstate actors. Emily certainly, what is happening with the u. S. China trade war is impacting u. S. Companies. The cybersecurity landscape continues to change, the Threat Landscape continues to change. How do you stay competitive in an everchanging world . George well, a big part of our success has been the fact we have really built a cloud platform. And in security, there has not really been a security cloud. If you think of service now, workday, and salesforce, there hasnt been an equivalent company. Part of our overall approach has been to collect a lot of endpoint data, Security Threat information. That has driven a lot of the Artificial Intelligence algorithms that we have. The more data we consume, the smarter our technology tends to get in identifying breaches that have never been seen before. So, that is a big part of the overall story. And i think what we focused on is really the platform approach as opposed to building yet another point product. And that has resonated well with our customers. Emily what are the biggest trends you see on the horizon, given that we are going into the heat of the u. S. Election season, and the last u. S. Election season was certainly not secure . George well, whether it is elections, whether it is intellectual property theft, or whether it is destruction from ransomware, these are all Cyber Threats that organizations of all shapes and sizes actually have to deal with. I think what it does underscore is just how Vulnerable Companies are, organizations are, nongovernment organizations, to these sort of cyberattacks. And unfortunately, they have been burdened with Legacy Technology that has been incapable of identifying these breaches. And again, that is part of what we really focus on is Building Technology not only to stop malware, but the broader issue is actually stopping breaches. Emily so, what trends are you seeing in company decisionmaking . Are Companies Rising to this rising threat . Are they as protected as they should be, or are they more broadly still very vulnerable . George i think more broadly, they are still very vulnerable. And unfortunately, there is a tapestry of Security Products that they have been using in the past that, again, have not given them the protection that they need. From an awareness perspective, the good news is that boards of directors are taking this very seriously. This is a board issue, a risk issue, and when you look at some of the attacks that we have seen a few years back, like wannacry, where ransomware literally took companies off the map for many weeks, in some cases months on end, it moved from just purely being infected to, wow, this can be a Systemic Risk for our corporation. And worstcase, they are spending hundreds of millions of dollars in trying to recover their company and bring them back to health. Emily meantime, we reported that cisco held talks with crowdstrike about a possible deal about six months ago. The deal didnt happen. Why did you decide that the right course was staying independent . George well, i cannot comment on rumors, but our goal has always been to be an independent company. And i think we have built the company, we have operated it as if it was a Public Company when we were private, and i think our growth and our financials are of the size and scale of what a Public Company should be. So we went public when we wanted to, and i think we have seen a warm reception today from institutional investors. Emily george kurtz, ceo of crowdstrike. Meantime, slack is expected to be valued between 16 billion and 17 billion when it lists its shares publicly next week. That is more than double the companys last valuation less than one year ago. Unlike many Tech Companies that have gone public this year, slack is forgoing the traditional ipo route with a direct listing. And investors will be allowed to begin selling shares immediately. Bloombergs ellen huet gave us the details. What does it mean . Ellen it is coming from people familiar with talks about the deal as they are getting ready for the direct listing next thursday. So we dont specify with whom, but yes, obviously the people involved are the company, investors, bankers, people thinking about how much is this Company Going to be worth when it lists next week . What is interesting is they are doing this math for the 16 billion to 17 billion valuation based off of some projections about the companys expected revenue for next year. So they are looking at this years projected revenue, the expected growth rate, and forwarding ahead to fiscal year 2021, because of the way their fiscal year calendar works, and expecting basically a 20 times valuation or 20 times revenue to make the valuation. Emily well, this sort of brings to mind the headline in which uber was targeting a 120 billion valuation, which as i understand it was floated by companys bankers and perhaps had nothing to do with actual demand. So, that was far out from the ipo. We are now one week away from slacks ipo, so this feels very specific. Ellen this is going to be a little different, i think, simply because it is a direct listing rather than an ipo. My understanding is that in an ipo, there is a little more control over where the banks and the company and everyone is going to agree where the company, or where the stock will open at. Right . They will set a price and set some boundaries around that. With a direct listing, its a little different. What is going to happen is, at some point, there is going to be a Reference Price that is going to come out either i believe from the exchange or the bank. As we saw from spotify, which did a direct listing last year, that reference range for the price was quite large. It was somewhere between i think the 40s, 40 per share up to 130. Pretty wide, its not very specific. And then what happens on the morning of trading, the exchange and the direct market maker, which in this case is citadel, will collect, buy, and sell orders from a bunch of different groups, and then try to figure out based on those orders where to open trading. And that may take several hours. Emily so, the skeptics say that slacks financials do not appear to be as positive as, lets say, dropbox or docusign, when both of those Companies Went public. Whats the response to that . Ellen well, slack has not been talking a lot. But it is true. If you look at slacks growth rate, or the growth rate of its revenue, it has been declining over the last few years. So, what is interesting is when we talk about the forward projections for the valuation of the company, they are based off of an assumption that the revenue will grow 50 next year because they have just seen that it is expected to grow 50 this year. But if you look at it, it actually grew somewhere in the 80 the year before and over 100 the year before that, so it has actually been declining. It is unclear i think to investors and people observing and deciding whether to buy this stock whether the growth rate that slack saw in some of its earlier years will continue at the same rate. Emily now, because they are doing the direct listing, it means investors and employees, right, can sell their shares right away. Should people buying into this company for the first time be worried about a talent exodus, if employees can now suddenly cash out . Ellen i think you know, we have already seen there has been some trading happening on the private market ahead of time. It has been pretty consistent with the expected price for the valuation of this listing, so somewhere around 16 billion to to 17 billion, and the volume has been i think as expected. So i think people are looking at that to get an indication of whether people are expecting to sell a bunch. I think with spotify, if you looked at the first few days of trading, there was not a lot of volume, and i think in the end, people are probably going to have faith that slack is a company to be held in the longterm and will probably not have a big selloff. But you are right that investors and employees, unlike in a traditional ipo, can sell the first day of trading. Emily spotify was very quiet on the day of its direct listing. Do we expect to see slack executives in new york on the floor of the exchange celebrating . Ellen im not sure yet if there is going to be banners and all that, but stewart butterfield, the ceo, will be in new york. They will be i believe doing something that morning on the new york stock exchange. And i think overall when you talk to experts about what they expect and what they hope will be a win for the slack ipo or the slack direct listing, excuse me, i think no news is good news. If it is quiet, if it stays pretty stable, if there is some trading and nothing crazy happens, it will probably be seen as a pretty big win. Emily bloombergs ellen huet there. As a reminder, bloomberg beta, the Venture Capital arm of bloomberg lp, is an investor in slack. Coming up, hong kong falls into chaos as citizens protest a china extradition bill, but what does it mean for investing in the region . And later, dropbox is coming after microsoft and google. How the Productivity Software company aims to evolve from a file storage system to a collaborative workspace. This is bloomberg. Emily in hong kong, chaos in the streets this week. Thousands of protesters demonstrated against a proposal to allow extraditions to china, swarming government centers. This as Hong Kongs Legislative Council attempts to debate a controversial extradition bill. Critics say the measure would blow up the legal wall intended to keep Hong Kongs Justice system separate from chinas. So, what does the unrest mean for chinas business climate, especially at a time when wall street is lending billions of dollars to chinas hottest tech unicorns . Bloomberg reporter crystal tse explains why exactly u. S. Banks are still interested in tech in china. Crystal we have seen that the Technology Startups in china are tapping the syndicated loan market in a really unprecedented pace. A lot of the wall street banks are taking their u. S. Playbook into china, lending these startups billions of dollars, and hope that they would get further mandate in the future, such as ipo and equity offerings. What we are seeing from this particular protest in hong kong did have some impact on the market. We have seen that trade has caused some of the ipos to pause. They have decided to wait until the environment clears up. Its still unclear, no deal has been pulled because of this extradition protest, but we should monitor very closely whether these companies that will be looking to go public in the next three, six months, will change their mind or have any sort of other contingency plan. Emily now, these Companies May have a lot of potential, but they are assetlight. They are unprofitable. So what is the attraction for investors . Crystal investors are really looking for highgrowth when they look at chinese Tech Companies. That is generally the theme for tech and china. As you said, these are assetlight companies. They dont really have a track record of profit making, but it is not really an unfamiliar notion. Because it is happening in the u. S. For a long time. I think the wall street banks are really looking at this as this really Good Opportunity to build relationships early on with these companies in the hope that further down the road when they go public, if they become, like, a billiondollar company, they would get the mandate for more lucrative fees. Emily so give us some examples of specific deals. For example, your story, you mentioned bytedance, certainly a big and growing company, but also a company that has run into challenges, specifically with the u. S. Government. Crystal yeah, so there are several companies that have raised big loans in the past. You mentioned tiktok, which is a really popular streaming app. They have raised billions of dollars, and that includes a lot of big names in that deal like goldman sachs, morgan stanley. We have seen some auto financing deals that have all raised big tickets. I guess this is probably the trend to be instead of raising private equity, where you would dilute investors at a lower price. You are raising private loans instead. So, you know, you keep that valuation, and you still can achieve the goal of raising funds for further growth. Emily and we have seen many u. S. Tech companies wait to go public, wait many, many years to go public. Is that the trend with chinese Tech Companies as well . Crystal it is increasingly going that way. Tiktoks has been tiktoks mothership, bytedance, has been talking about raising funds, but nowhere close to being public yet. We are seeing other big unicorns such as alibabas financial affiliate. They have been private for the longest time. So these are the really big leading Tech Companies in china. They are really taking their time instead of rushing to the public market, like their other peers in china. Emily bloombergs crystal tse, there. Coming up, we head to capitol hill to hear one lawmakers thoughts on big tech. Our conversation with congressman doug collins of georgia is next. And bloomberg tech is Live Streaming on twitter, check us out technology. And be sure to follow our global breaking news network tictoc on twitter. This is bloomberg. Emily welcome back to the best of bloomberg technology. I am emily chang. The u. S. House Judiciary Committee held hearings on tuesday to discuss whether or not big tech has gotten too big. They kick things off by looking at the detrimental effect the internet has had on journalism. For example, according to a december study from pew research, more American Adults now get their news from social media then they do from print newspapers. A Top Republican on the Judiciary Committee, congressman doug collins, attended the hearings and spoke with bloombergs vonnie quinn and tom giles. Rep. Collins the journalism protection act it is something , that is on how tech can Work Together to provide a better platform so that everyone in the process can be enriched in this. I think the interesting thing is we dont want to lose out on the local content, local flavor that the big platforms are just not going to cover. And frankly, the big platforms and tech platforms dont want to lose out on the content it helps them generate as well. But this is an opportunity for everyone to come to the table and begin to have ideas on how we can move forward in the future in a symbiotic relationship instead of one that seems to be at odds at times. Tom representative collins, this is tom giles. My question for you is how exactly will your legislation help remedy the situation . Rep. Collins what it will do is instead of the i like to take for example my district, which is a relatively rural district which is mostly fed by a single county or weekly paper. They have no way to really in a way negotiate with bigger platforms on their advertising rights and respect for the content that is being taken at this point. What our bill simply does is for a fouryear period, takes out the antitrust exemption to allow these newspapers in various areas and sizes to come together and negotiate in a better bargaining position. Say, how can we continue to protect the content from a local area and get a better rate in advertising and a cut of that that are being taken from us now and also allows frankly the house to come in and say how we can better enhance what we are offering to our people as well . Vonnie congressman, would you ever subpoena executives or documents, even if they were proprietary . Rep. Collins i think going into subpoenas and Everything Else is something that has been overblown frankly by some on the committee. This is a time when what we have agreed to do is to have hearings, and to say there is a legislative solution as if this is an adversarial solution, i want the Tech Companies and the others to come in and say how are we in the state of technology now . I am not one who simply says it needs to be broken up because it is big. I think what we actually need to say is, how do these new technologies work in the environment today and how do their competitors work traditionally in what is known as antitrust . Everyone has a part in the picture to play as we look forward to the privacy and data and commercial aspects of how tech dominates and how our other industries are as we work forward with them. We have to have input first and i think most players are going to be involved in that. Vonnie do you believe there has been an effort to suppress or downplay conservative views on social media . Rep. Collins i think there is some valid and legitimate questions. We have had some of these conversations before with the social media platforms. I talked to sundar at google he has been in my office, we have had these conversations about how the algorithms and the searches work. We talked with twitter, we have talked with facebook. These are conversations that need to happen. I think especially the youtube issue, we have got to make sure that at a certain point in time that the safe harbor positions are working as they should, and the platforms that have enormous responsibility for what they put out on their platform now, and it is not just simply a billboard where everybody goes by and puts up what they want to put up, there is editing involved here, and i think that is a very valid conversation for these tech platforms to have to come and answer for. Tom congressman, what is your response to the argument that the big Tech Companies have actually helped Media Companies stay afloat and indeed thrive by providing them a lowcost Distribution Platform . Rep. Collins i would not disagree that there has not been areas in which they have been able to thrive. I think that came out at the hearing today, that some of these organizations, and along with the big tech platforms, have an ability to increase their viewership or increase their presence. However, at the end of the day, though many of the smaller news , organizations are being, having their content taken without being able to access the profitability part which is in the accounting revenue and ad revenues, or pay for the actual content being used. And i think that is where the disconnect comes. It is not a matter of the pie being enlarged. The question is keeping some of the folks away from accessing what is rightfully theirs from a content perspective. Tom we understand the doj and the ftc have had a meeting of the minds and are, in a way, dividing the tech industry. What is your sense of how effective Law Enforcement and regulation can be in terms of reining in the Technology Industry . Rep. Collins well again, it goes from a simple perspective. The doj and ftc are looking at this from a perspective of saying, has there been issues that they need to investigate from a legal standpoint that need a legal remedy . Im sure they will look into that as a forefront. The question i have is, this is not simply to say we need to step in simply because a company is dominant or a company is big. Sometimes you get big simply because you provide the better mousetrap. That is never something from my perspective that should be punished. As we look at that, if there are criminal acts that need to be involved, i am sure they will be there. If there is antitrust issues, i am sure that will be looked at. But i want to see it come forward in a position, especially from the congressional standpoint, to say how does this work in the overall economy and how do we let everything Work Together . Emily congressman doug collins there of georgia with our own tom giles and vonnie quinn. Dropbox unveiled a new integrated workspace tuesday in its biggest overhaul software to date. The company introduced a desktop workspace with updates to its website and mobile app that allow customers to combine different files and collaborate across teams. Bloombergs Caroline Hyde and Romaine Bostick spoke with dropbox ceo drew houston about the new changes. Take a listen. Drew we are really excited about it. It has been a big morning, we have launched the biggest change ever made to our products, all new desktop app. It involves the dropbox experience from a folder full of files to a living team workspace, where you cannot only have filed but any cloud content. Google docs, suites and files, really anything that you are using. Integrations with tools like slack and zoom. Within dropbox you can send messages and start meetings. You can see a calendar. It is a much more integrated workspace because we saw so many of our customers and frankly ourselves struggling with these new apps. They are great, but how do you stitch them all together . We see a big opportunity to make that a seamless opportunity. We are really excited about it and cannot wait to get it out there. Romaine do you see this type of integration of these apps, do you think this is something we will see more of, not just in your particular corner of the tech space, but with other types of software and Software Services . Drew yeah, absolutely. I mean certainly, most if not haveompanies are going to integrations, but the opportunity we saw is to organize it. To really bring it into a welldesigned, coherent experience, and i would say different from some of the messaging tools. What dropbox allows you to do, within a native app, you can work and have all of your content in one place, work across all these different ecosystems. Instead of the interface being a list of messages, you can see here is what we are working on, here is our projects, here is the most important piece of the content. We think from a design standpoint, it is a pretty different approach. Jonathan drew, from the perspective that the aim is to keep everyone coming back to dropbox, but as much as you are working with the other apps, you are also competitive for peoples eyeballs, for peoples time. Do you really think that this plethora of new apps we are having can really survive in and of themselves . The fact you have deals with zoom, slack, google, microsoft, yourselves do you think the , ecosystem can support all these different players . Drew we certainly do. And i think what we are seeing is that users want choice. They are using all kinds of different apps for communication, for content, for coordination. And what is missing is a way to stitch it all together. And so that is the role we think we can play. It is very similar to the role we played in the beginning, like helping you get to your stuff from all these different platforms and operating systems. Now we think about how to organize your working life and help stitch together all these different things. Second, i say is a lot of what we are doing is complementary. So you are not going to stop using slack or stop using these other tools. In fact, we are making it easier for you to get them. We find that a lot of our customers love using these different tools, but they need a more integrated experience, and not having that means you are always switching back and forth, and there is a lot of friction. Caroline it is interesting within the Enterprise Software space, we are talking about numerous players. When actually the argument from capitol hill at the moment is that there are too few players when it comes to the Technology Space. They are monolithic. They are monopolies. They need to be broken up. How do you as a ceo in this Technology Space take this sudden viewpoint coming from capitol hill, and do you think it has got grounds in any way . Drew well, i think it is an important conversation to be having. From our perspective, we think competition is a good thing. And we need a level playing field. So it is going it is an important conversation. Romaine one of the other conversations out there, drew, is just the idea of responsibility a lot of Tech Companies, particularly those who traffic in content, have. I wonder how you view not only what has happened, but really what type of responsibility you think the companies themselves should be shouldering to make sure their services are used in i guess a proper way . Drew sure. Well i mean, trust and safety is the first thing on all of our minds. And all aspects of that. Whether it is the security of service, or the content people are putting on Services Like dropbox and keeping them safe, i think we are seeing a broader conversation of a lot of Technology Companies finding themselves in situations, how do we protect free speech but then what do you do if people put up content that is objectionable or unsafe or not true . Fortunately, our role is a little simpler. People dont usually use dropbox as a publishing platform, but we certainly care about the safety and wellbeing of our users, to the extent that anyone does put objectionablcontent on dropbox, we take it down. Emily that was dropbox ceo drew houston. Coming up, we head to los angeles for our coverage of the e3 gaming conference. Our conversation with type two interactive is next. And later chinese electric carmaker nio has seen its stock plummet more than 50 this year, but the ceo remains optimistic. That is next. This is bloomberg. Bloomberg. Emily the esports market is booming with highly skilled players, arenasized audiences, and revenue projected to reach 1. 8 billion by 2022. Bloombergs Shelley Hagan takes a look into the upandcoming business. Shelley it is a far leap from the penny arcade. Esports now takes the center stage of the gaming world with highly technical players, arena sized audiences and big sales. The global esports market raked in 865 million in revenue over 2018. With nearly 26 Million Viewers in the u. S. The audience is largest in asia, boasting 50 of the worlds viewers. That is compared to just 12 in north america. And with the e3 conference underway this week in california, all eyes are on the booming business. Two californiabased egaming companies, Activision Blizzard and electronic arts, have a combined market cap of more than 60 billion. Private investment in esports is growing as well. Total u. S. Venture Capital Investment reached 1. 8 billion in 2018, up from 32 million in 2008 a more than 5000 increase in a 10 year period. Cloud 9 esports, a north american team, recently raised him 53 million last year. Teams compete in popular games, from fortnite, world of warcraft, and league of legends, which is a videogame with the largest number of players, estimated to have totaled 100 million players. And the winners take home more than the high score. The largest prize pool was close to 26 million at the National Dota 2 championships in vancouver, canada. And with the Global Market expected to reach 1. 8 billion by 2022, it is far from game over. Shelley hagan, bloomberg news, new york. Emily meanwhile developers including microsoft, Activision Blizzard, electronic arts, and Take Two Interactive are just a few industry players who participated in the event to highlight upcoming releases. This years conference is different than years past. Instead of focusing on hardware and new titles, a lot of it has focused on streaming and how these games are played. Take two interactives ceo joined vonnie quinn to explain. Strauss we are showing borderlands 3, which comes out september 13, obviously the third in the borderlands franchise. We are super excited about it. We have a hundred different stations where you can play the game here. People seem really happy to be playing the game. We could not be happier with it. Vonnie in terms of the pipeline, what do we expect from take two beyond that . A lot of people are talking about red dead online. It exited beta in may. Should we anticipate some more of red dead . Strauss you should be expecting more content for red dead online. There will be plenty coming, that is what Rockstar Games has said. More content is also coming in for grand theft auto online, which continues to be a big title five and a half years after the initial release. In terms of upcoming releases, we obviously have nba 2k coming, wwe 2k. This should be a very exciting year for us. Vonnie are you interested in bidding for any other sports licenses . You mentioned nba. You also have wwe. What else are you interested in . Strauss well, the sports business is pretty well spoken for in the videogame space. The nfl property is under exclusive license. One of our biggest competitors controls the fifa title. We have brought out other sports. We have golf for example, we had boxing, we had hockey. But right now, our focus is on golf and of course basketball. Vonnie we are seeing more and more subscription models. What is your plan for subscriptions and indeed for streaming, strauss . Are you launching your own platform or anything like that . Strauss we would want always to distinguish between a technology streaming and a Business Model subscription. And we are interested in both, but they are very different animals. Of course you could have a subscription business without streaming, and you could have streaming without subscription. We are excited about the upcoming launch of google stadia. We are excited about many potential developments in the market. We are supporting google, we are supporting microsoft, and i expect we will support others as well. Subscription vehicles, many are being developed, some exist already. We support game pass on certain titles. We are openminded. In terms of a direct to consumer presence, we have our own small direct to consumer presence, and we are obviously looking at that market as well. Our view is generally speaking when people look to acquire entertainment properties, they want to go where they can get a multiplicity of properties, not typically where they can only get an offering from one company. Vonnie interesting. Strauss, you have had a partnership with tencent for china since 2012. How concerned are you about the current standoff between the u. S. And china for growth of Take Two Interactive there . Strauss we are very optimistic about china. Our relationship with tencent is great. And the nba 2k online title, up about 74 yearoveryear. Title, with 45 million registered users. Actually the recurrent Consumer Spending on that title is up about 74 yearoveryear. We also distribute in china in a myriad of other ways. Our nba 2k title was just approved for ps4 in china. We think there is a great Market Opportunity in china. And we are hopeful that the trade talks will be resolved amicably, positively, and in a way that is beneficial for the overall entertainment business. Emily that was Take Two Interactive ceo strauss zelnick. Still ahead, lawmakers and Business Leaders head to london this week for bloombergs sooner than you think conference. We will discuss the future of londons tech scene as the city looks to redefine its relationship with europe, next. This is bloomberg. Emily the u. S. Continues to press allies like the u. K. To ban huawei from the next generation of telecom networks. Bloombergs Caroline Hyde spoke with the u. K. Digital and culture secretary Jeremy Wright at the sooner than you think conference in london about the issue. She asked about the countrys position in the race to 5g, given questions about huawei. Take a listen. Jeremy it is important we have good Quality Equipment and important we are at the forefront of the 5g revolution. We want to do that. But what is just as important, if not more so, is that we have a safe and secure telecom infrastructure. What we are doing isnt focused on huawei. It is not even just focused on china. I am looking in my department at a way in which we can develop a system for the whole Telecom System supply chain to make sure that whoever supplies the equipment, they meet our requirements on safety and security. That is what we are working on, and we will bring those proposals forward as soon as we can. Caroline when will there be an end to its review . Jeremy i cannot say exactly when decisions will be made. You will be conscious of the fact that the americans have made decisions very recently that we have to take into account, which in a hugely connected Telecom World will have an impact on huawei and on other suppliers consequently. We have to work through the consequences of that before we make a decision, but we will do that as soon as we can. Caroline how difficult does it make it, the u. S. Decision, to blacklist huawei . Jeremy you cant pretend that the decisions made in other parts of the world dont have a bearing. If components from america go into components supplied by huawei, into the u. K. Telecom system, then all of these things interact. So we have to work through the implications of all these decisions, understand them, then make our own decision. It is for us to decide what is best for the u. K. , but we have to accept the reality, which is that this is a hugely interconnected world. Caroline your background as a lawyer coming into play in a big way, im sure. Jeremy, talk to us about the growth we are still seeing in london, outside of london as well. I mean, the u. K. Has really been focusing on technology growth. How much of a distraction do you think brexit has been and the concern, is it significant . Jeremy two things, first of all, youre right. Growth is happening across the u. K. , and thats very pleasing. We are seeing huge growth in places like manchester. If you look at the report that came out today, Job Opportunities in oxford, cambridge, reading, newcastle and belfast. So they are all across the country. In relation to brexit, people are concerned that when we leave the European Union, if you are in the tech sector, you will still have access to the talent you want to bring in, and some of that talent comes from the European Union. So what will happen, of course, as we leave the European Union is we will be able to design our own immigration system. And we should do that if we are sensible, and i hope we will be, in a way that makes sure we bring in the people we need and want. So all we are saying to the tech sector is look, we have this opportunity to design the immigration system that we want. Come and help us design it, tell us what it is you want to see in our immigration system that will enable you to continue to access that talent. Emily that was u. K. Digital and culture secretary Jeremy Wright. At nio, the aspiring tesla competitor from china, electric car sales are plummeting. Losses are mounting and the stock price is cratering. But founder and Ceo William Li does not seem to see what all fuss is about. He spoke exclusively to bloombergs selina wang. William i think our investors dont understand our longterm value. From the standpoint of nio, we have faith in our longterm value. There are complicated reasons led to the stock rise and fall which is beyond our control. Its a very complicated thing, especially if there is a shortselling mechanism in the u. S. Selina but you speak of the challenges in the u. S. Meanwhile the Chinese Government is trying to attract the top Technology Companies to list on domestic exchanges. Is that something you would consider . William now the shanghai tech board is still at an early stage. We need to look into its regulations, which is also very complicated. We will consider overseas investors interests. Selina so the money that you have from this partnership in china you think will be enough to last you through the rest of the year . William broadly speaking, we would like to connect the u. S. And Chinese Capital markets. Nio has raised funding from global investors. We have not raised any rmb funding, but most of the funding are u. S. Dollar. Through the entity nio china, we will be able to raise rmb funding in future. As per the rmb fundraising, we definitely have a clear timetable. We hope to close the deal in the foreseen future. So far, we are on schedule. Selina it took tesla 16 years to become profitable. How long is it going to take nio . William you cannot ask a four or fiveyearold toddler to make money. I think it is quite difficult. If you look at tesla, it has been established for 16 years. Nio has only been established for over four years. I am sure that we do not need over a decade to make profit. Selina so what are the plans for the United States . If you are not expanding in 2020, how are you thinking about the United States as a market longterm . William im currently leading a team who has been working so hard, aiming to answer the question, what do nios product and service, nios Community Mean to the u. S. Customers . What is the correct way to provide service to them . We will start to provide service after we figure it out. Emily that was nio Ceo William Li. That does it for this edition of the best of bloomberg technology. We will bring you all the latest in tech throughout the week. You can tune in every day. 2 00 san francisco. We are Live Streaming on twitter. Check us out technology and be sure to follow our global breaking news network, tictoc. This is bloomberg. Were the slowskys. We like drip coffee, layovers and waiting on hold. What we dont like is relying on fancy technology for help. Snail mail we were invited to a y2k party. Uh, didnt that happen, like, 20 years ago . Oh, look, karolyn, weve got a mathematician on our hands check it out now you can schedule a callback or reschedule an appointment, even on nights and weekends. Todays xfinity service. Simple. Easy. Awesome. Id rather not. Paul welcome to daybreak australia. Shery i am shery ahn in new york. Sophie i am Sophie Kamaruddin in hong kong. We are counting down to asias major market open. Paul here are the top stories, people power, demonstrators flooded the streets of hong kong against. The government shelves if the bill and the governor says she is sorry. But trade breakthrough of the g20. Wilbur ross only expects