The year that was. We check out how Big Tech Companies apple and facebook fared in 2019 and how each is set up for the new year. We begin with a look at tech in the markets, most notably, semiconductors. We see that chipmakers bottomed out nearly a year ago and have been on a riproaring rally since then. Micron adding to that sentiment, as the Company Reported firstquarter earnings wednesday. Micron impressed wall street with a strong outlook of between 4. 5 4. 8 billion dollars in revenue. Shortly after the Company Reported, i got insight from Wedbush Securities analyst matt bryson, who joined me on the phone after the analyst call. Matt they are seeing tightness in certain areas. Also, they are calling the bottom for memory in general. They think this Current Quarter is going to be the bottom of the cycle. That fits with the tightness in certain areas. And very much parallels the guidance they gave for gross flat margins, which suggests that prices are normalizing finally. Does this have any implications for capex or expansion of capacity . Matt at this point, they are remaining conservative in their capex outlook. They are keeping their guidance steady. I think that is the prudent thing to do, to wait for demand to come back. They did note that there is a point of uncertainty in terms of how much inventory china has accumulated. I have just come back from asia. That is something i continue to hear from assistant billers over there. I think they are taking the prudent course right now and not yet investing capex. If the recovery continues, i expect that memory general will look to support their customers and expand capacity but thats not happening yet. I am showing a chart to our terminal audience in my terminal, which is the share price of micron, and then it is the lower and lower dram in nand memory chip prices. We have been calling for a bottom for a lot of 2019. Are you confident we have really hit a bottom in those memory chip prices . Matt on nand, i am. Looking at pricing moving forward, i believe contract negotiations around solidstate drive pricing have been concluded favorably for calendar q1. When you look forward in the nand space, you have got a huge driver of demand in the new gaming consoles, which are shifting from hard drives to ssds. You also have an added boost and better handset outlook, in part predicated by 5g. On the dram side, it is slightly more difficult to call. I am starting to hear that server dram contract is moving up. In my mind, thats the first assigned that we have really bottomed on the dram side. Spot pricing over the last couple of weeks is starting to rebound. Cloud customers, who are an important point of demand for dram, have increased buying. While there is not quite as much visibility there, yes, i think we have seen a bottom. Taylor that was matt bryson of Wedbush Securities. Tesla shares soared to a record high this week, hovering near elon musks goal of 420 per share. You may recall that back in august of 2018, he tweeted that he sought to take tesla private at 4. 20 per share. More on that story, i talked to bloombergs craig trudell. Craig you do have a lot of electric vehicles, just cars in general that are priced, even premium cars priced below where you see the tesla model three. When the price came out for the made in china model three, i think it caught a lot of people by surprise because its not that big a difference and the whole sort of reason for building this plant locally is the idea that they can bring the price down by avoiding import duties and so forth. You are seeing tesla make a bet here that there is going to be just sort of natural sort of goodwill of getting a plant opened, getting governments on board. There are a lot of government purchases of electric vehicles in china. Tesla making a bet that the sort of initial buzz about having the model three built in china will itself kind of carry them for the First Six Months next year and then you bring the price down. I am going to show a chart which is the big headwind and the macro backdrop slowing car sales across the curve really in china for the last year or so. Is a 20 price cut enough to offset this drop in demand . Good question. If you are elon musk looking at that chart, youre a lot more nervous about the state of the china market than really if you look at when those drops were really kicking in, its around the time that tesla was getting a deal, signing on the dotted line to get this plant built. It was built extremely quickly. That is unusual. This was a muddy field in january of this year. We are talking about a plant that is already opened and cranking out cars, potentially delivering them to customers within the next few days or weeks. This all happened extremely fast. We have seen some softness in the china market, but the degree to which the market really deteriorated this year i think caught a lot of Car Companies off guard. It is a cause for concern if you are tesla, despite the fact that you have real brand power and a lot of star power as a company that is sort of on the leading edge of electrification. What has changed for tesla that they can afford bringing the cost bringing the price down now, instead of just from the getgo, given that some customers can just wait and hold out and not by it and wait until prices drop, right . I think thats a really interesting point and it will be interesting to see how long they can hold out before doing a price drop. When you think about what tesla has been up to this point, it has been a company that has made all of their cars in california. It does not have serious manufacturing breadth across the world in some lower cost markets so labor costs will come down significantly. You are able to avoid levies and tariffs and get special treatment in terms of incentives and so forth. So definitely, you could see that price come down further if the initial demand is not quite what they are expecting here. Taylor that was bloombergs craig trudell. After ditching ups and fedex, how amazon is bulking up to meet Holiday Shipping expectations. If you like bloomberg news, check us out on the radio. You can listen on the bloomberg app, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. Taylor with less than a week left before christmas, it is do or die time for the delivery machine amazon has been assembling over the past few years. As its ditching long Logistics Partners like ups and fedex, the ecommerce giant is beefing up its Delivery System to prepare for the strain of holiday orders and expectations. I spoke to bloombergs Spencer Soper wednesday from seattle. Spencer it is handling more of its deliveries than ever before. So its estimated that about half of all amazon packages will be delivered by this system that amazon has created. This is independent contractors who start their own businesses by leasing a bunch of vans and hiring people. Its also flex driver. Its the first year that amazon is doing so much of its own last Mile Delivery so aggressively. We have got some hints of bad weather coming. That is always the big wildcard. A system that can work a great through decent weather can break down in bad weather, so a lot of it will be dependent on mother nature. Taylor those are things outside of its control and there are things inside of their control, like that last mile. Have they mastered that last Mile Delivery . Spencer they are spending a lot of money on and doing a fairly decent job. There are a lot of independent experts who monitor the shipping. They are hitting 90 plus, basically on par with fedex and ups. They are also doing things differently than ups and fedex. A lot of is having multiple trucks or these backup flex drivers adding the same neighborhoods on the same day. When you think about seeing a postal truck, you will usually see it maybe once a day and then its gone. You might see multiple amazon vans and vehicles crisscrossing your neighborhood every single day. Amazon is saying this is necessary to provide the capacity we need and get everyone there packages in time for christmas. Taylor spencer, am i right or jumping too many hoops if i wonder whether we should start looking at amazon as a Logistics Company, no longer an Ecommerce Company . Spencer they have been a Logistics Company for years. It has always been more the back end part, warehouses, storage, parking items. They have been in the logistics game for a very long time. We are just seeing them increasingly branch out from that with the planes and now with the last mile of delivery. You may be used to seeing most commonly the Postal Service trucks and the big brown ups trucks. Now you are likely seeing those blue amazon prime vans as frequently or more frequently than you are seeing anything else. Taylor that was Spencer Soper. One of the biggest sources of funding for Silicon Valley startups was the focus of a Bloomberg Businessweek cover story. The report that employees depicted a culture of recklessness within softbank. Sarah mcbride helped bring this story to life and she joined me on wednesday. Sarah hes an incredibly interesting guy. Hes a korean immigrant to japan. He grew up in this very kind of hardscrabble way, supersmart. Came here to the u. S. , attended berkeley, moved back to japan, started softbank. One of the things that stood out about his background to me is that in 2000, he invested 20 million in alibaba. That stake is now worth 130 billion. He is a smart guy. Taylor what do we know about his management style and how it has sort of fueled this environment for these outside bets . Hes a go big or go home guy. He wants his Portfolio Companies and investment professionals to keep thinking bigger. Sometimes, that is great, like when a young entrepreneur comes to him and he tells them, you are going to be the next jack ma, your company is going to be even bigger than you think, have you thought of this business idea or that business idea . But then sometimes he gets impatient. We have this detail in the story about how during a conference call, he was talking to one of his investment professionals about full truck alliance, a chinese company, and was basically saying, why are your outlooks for this company so small . This company can be big, and was a sort of berating this guy on the phone for not thinking big enough. Taylor when we talk about some of these outside bets, we would not be here or focusing on the company so much if it werent for wework and sort of the big debacle of wework. Do we know anything about if wework has structurally change anything inside that culture . After the derailed ipo, they really had to rethink things. Masayoshi son expressed a kind of he said he regretted how everything had played out at wework and how it had created some changes in thinking inside the fund. They are still going to think big and depressed people to grow their companies as hard and fast as they can, but i dont think its going to be growth at all costs anymore. Taylor that was bloombergs sarah mcbride. You can read more of this story and others in the december 23 issue of Bloomberg Businessweek. Coming up, big tech is on a quest for dominance in consumer baking. We will discuss how it is all shaking up fintech with one of the latest unicorns. Later, an app helps you rake in the money during the Holiday Shopping season. This is bloomberg. Taylor apple wallet, uber money, google checking accounts. It seems like everywhere you look, big tech is getting into the Financial Services game. So what is that trend doing to fintech . We asked henrique dubugras, the ceo of recently minted unicorn brex, which has a partnership with mastercard. I asked him about the Financial Product opportunities. Henrique i believe that there is a clear distinction between distribution and actual innovation in financial. I think a lot the Big Tech Companies, what they are doing is just creating few Distribution Channels for existing products. So for example, amazons credit card is issued by jp morgan and american express. I truly believe that if there is no Technology Development in the back end, it will not change much. I think a lot of the opportunity are for both fintech firms and nonfintech firms that actually rebuild the Technology Behind it and dont use the technology built by the banks. Taylor so as you talk about that and some of the partnerships, i noticed that you have a partnership with mastercard. What are you hoping to bring them and what are they bringing you in terms of that technological innovation . Henrique i think it is exchange of knowledge. They have been working with banks and have accumulated a lot of knowledge and expertise over the years. And we, bringing the side of technology and innovation from Silicon Valley. It is a very Solid Partnership because we can learn from them, they can learn from us. We get to use their big distribution network, so brex card works anywhere where mastercard works. Taylor how are you hoping to differentiate yourself . We talked a lot about uber money, for example. What else are you hoping to use to make sure that you stand out in what is a very crowded field . Henrique the first thing we do is focus on businesses instead of consumers. A lot of the focus has been on building, you know, if Financial Services for consumers. Brex is for businesses. Number two, we rebuilt the entire system from scratch. We dont use any kind of Legacy Software provided by the banks like most of these other companies. We basically rebuilt everything from scratch, and that allows us to create functionality that did not exist before. For example, not requiring any kind of personal guarantee on business cards or having extremely simple expense managements on your card. Taylor how are you expanding outside the traditional fintech world . I am thinking into ecommerce or lifesciences businesses . Are you increasingly taking on more clients from those new sectors . Henrique so we basically are of the view that, you know, you cant pull businesses together into one thing. A startup and Ecommerce Company in a hotel and lifesciences and restaurants, they are all completely different businesses. In the future, a lot of the products will be catered to these verticals instead of being to generic to smbs. There are new fintechs focused on millennials and the affluent and under banked. We think in business, it will start be focused on the vertical. Taylor i wonder. We have been showing your valuation, getting a newly 2. 6 billion valuation over the summer. I ask a lot of the unicorns that come here if it is helpful or hurtful, given the extra scrutiny that comes with now being valued at more than 1 billion. Henrique i think for us, as a Financial Services company, it is definitely more on the helpful side. Brex is a fairly capitalintensive business because we are lending money. In order to lend money, we need money. In order to establish credibility, the valuation definitely helps. More than that, being able to raise a large amount of money is what is enabling us to actually go and disrupt this sector, Financial Services, which is full of very big and established banks. Its very hard to do that without the money. Taylor that was the brex ceo. Robots have replaced thousands of routine jobs on wall street and now they are coming for the higher ups. Thats the contention of a Cornell University professor and the former head of Machine Learning at aqr capital. He testified in washington earlier this month about the impact of Artificial Intelligence on Capital Markets and jobs. He joined bloomberg and me on tuesday. Today, we have a data sets that were not available 23 years ago. The only way to monitor these data sets is by utilizing these complex techniques. Taylor when you say data, how is this different from 10 years ago to just a few years ago and how fast has the change been . A few years ago, we did not have credit card transactions, engineering data, or even data that comes from narratives, reading stories, extracting sentiment from news articles. These data sets did not exist before and today, they exist, and they are able to we can extract information that is valuable for making investment decisions. I wonder if this is a zerosum game, if the robots and the Machine Learning wins, highpaying finance jobs lose or if there is a way to retrain some of these employees. There is definitely a way to retrain these employees. Not all of them will be able to retain their jobs. But in many cases, we can retrain these individuals so that these algorithms augment their capabilities. They dont need their jobs to be completely automated, but these algorithms can assist. How vulnerable is the finance industry to say crowdsourcing . What could it do to the hedge fund industry, for example . Thats right. Tournament is a particular case where we can crowd source the forecasting of prices on all sorts of Asset Classes to the data science community. It is a job that has so far been done by a very narrow set of individuals within hedge funds. Now, you can turn this information to the entire community, people working at nasa, national labs, working at pharmaceutical companies. They can use these to turn these decisions into investment products. Taylor i found it fascinating in your testimony when you were talking about renaissance capital, for example, which is one of the early adopters of Machine Learning. Average annual returns of 35 . How far off are we from this becoming a crowded trade where everybody uses this, that those outsized returns are no longer outsized . It is still a small percentage of the total assets under management. When you think of the tens of trillions of dollars being invested today using discretionary decisionmaking processes, or even quantitative decision processes that are not based on Machine Learning, there is a lot of room for deploying these algorithms. This is not a crowded trade by any means. Of course, we are seeing investments now only on skilled but also on students, right . You have to train these students to actually go and work with the data and algorithms. What happens if you continue to see this u. S. China trade tension and you educate them here and then these procedures become harder, all these people leave the United States . This is one of the concerns that i think a lot of the professors have. 90 of our students are here on a visa. Most of these students will graduate, they will not be able to stand United States. As a result, we are essentially training our competitors. Taylor that was marcos lopez de prado. Making money while you shop. A japanese ecommerce site wants to help you do just that. We will hear from the companys president next. Bloomberg technology is Live Streaming on twitter. Check us out on technology and be sure to follow our global breaking news network at quicktake on twitter. This is bloomberg. Taylor welcome back to the best of bloomberg technology. I am taylor riggs. Its the final stretch of Holiday Shopping season and ecommerce platform rakuten is confident it can attract customers with the best deal and a cash back program. But how does the chinese retailer make money . Rakuten president kristen gall spoke to alix steel tuesday about their Business Model. Kristen the Holiday Shopping season is really interesting this year, particularly because we have one less week between black friday and christmas this year. What we are seeing is unprecedented deals at a massive amount of retailers. I think you are definitely seeing marketplaces pop up in a big way. Their deals are aggressive, but also an interesting trend is in the direct to consumer world. We have a lot of retailers like chewy and all of these smaller players that are increasingly taking a place in the retail stage this year. Alix so where are they shopping . Will it be ecommerce, retail stores, and what areas are seeing the biggest uptick . Kristen in terms of where people are shopping now, we obviously saw a lot of really aggressive ecommerce shopping particularly centered around cyber monday this year. Cyber monday was definitely the day, even more than black friday, the everybody came out to play. I think with the consolidated time between black friday, cyber monday, and christmas this year, it will change the patterns of Consumer Spending a bit. Pop on cyber monday. There was a bit of a lull while people got ready for the christmas season. This week, it is getting really aggressive again. This is one of the last days for people to shop online before christmas, when things get shipped before christmas. What we will see this week is a gradual shift towards things like buy online, pick up instore, and more instore shopping, or towards retailers like amazon that offer oneday shipping overnight. We do a few things that are attractive for consumers. We pay cashback on transactions that 3500 plus stores, which in its own right is attractive. The second thing is that we have all the stores Consumers Want to shop at. We really have a Broad Spectrum of stores in the retail industry. Everyone is very well represented. The third thing is that we amalgamate all the deals from all the retailers. We allow people to stack cashback on top of retailers deals that already exist. If they have a coupon code or a sale going on, people can stack cashback on top of that and then use the rewards credit card on top of that. The deal stacking gets really aggressive, so a lot of value seeking customers and people looking for the best deal. Alix how do you make money . The cashback is definitely a real thing, some where you can make one for one. Whats the Business Model . Kristen we have about 13 million members. Its a very large audience of people. Companies pay us to send traffic to them. They pay a commission on each of the transactions our customers make and we share that commission with customers. Its a pretty easy, simple Business Model where everyone wins. They get the traffic and our members win in terms of getting the cashback. Alix if you have retailers that get better at their omnichannel, ecommerce section like walmart has and target has does that step over you . ,they dont need you that much anymore what do you notice . , kristen there is a sub segment of customers for whom this is a very attractive value proposition. They shop this way, regardless of who is or who isnt on our platform. They will shop with the people on our platform because they are very loyal to us. Even if people get better at omnichannel, we are playing increasingly in the instore cashback space. We offer not only online but instore cashback. Also, there are groups and audiences that these retailers cant reach without us. Taylor that was rakutens president , kristen gall. Pushg up, proposed tariffs apple to the forefront of the u. S. China trade standoff in 2019, but it was ceo tim cooks relationship with President Trump which may have helped the company avoid a steep levy. We will explore some of the big tech stories of 2019 next. And what were the most downloaded apps of the year . We will have those lists coming up. This is bloomberg. Taylor all this week, we profiled some of the Biggest Technology companies and how they weathered the challenges of 2019. Facebook ended 2019 much as it began, under political and regulatory pressures over content moderation, acquisitions, data privacy, and plans for a cryptocurrency. The social Networks News feed proved no longer the lone jewel it once was. Acquisitions of instagram and whatsapp became more interesting in terms of their performance and potential. Everything is growing, facebook, instagram, messenger, whatsapp. Taylor instagram and whatsapp with adn the breakouts revenue and recordbreaking facebooks plan to integrate their platforms have caught the eyes of the federal trade commission, which may try to stop the plan to merge the technology platforms. This is not the ftcs first look at facebook. This past summer, the social network was slapped with a recordbreaking 5 billion fine as part of a settlement over consumers privacy rights. Facebook betrayed the trust of its users and deceived them about their ability to control their personal information. Taylor data privacy is now the focus of the European Unions commissioner of competition. She is investigating how data may be used to unfairly stifle competition. No place was more focused on facebook than washington, d. C. Where Mark Zuckerberg appeared , many times. At georgetown university, he defended his decision not to fact check ads from politicians. Mark as a principal in a democracy, i believe people should decide what is credible, not Tech Companies. Taylor it was zuckerbergs congressional appearances that likely generated the most interest, as facebooks cryptocurrency plan, called libra, was called into question by lawmakers. Is it a currency . Are you a bank . What is this association . Mark it is a very complex project and as you say its , risky. Taylor as facebook enters 2020 in a risky place, with the new year. The project is under review of the u. S. Justice department, ftc, and nearly all the states attorney generals. With that kind of pressure, we will have to see if facebook investors stay or shy away. As for facebooks performance in 2019, i got perspective from techonomy Founder David kirkpatrick and Pivotal Research analyst Michael Levine. Wall street just doesnt care about anything except growth and earnings and revenue. In a year when facebook got a 5 billion record fine, gigantically greater than any other company that has ever in fined by the ftc for privacy matter, and their stock still performed beautifully well for the year. You really have to say, well, we are not going to get any help from wall street in reining in a company that really needs to be reined in in ways that frankly are hard, but face it, somebody has got to do it. Taylor michael, i want to come and take a look at a chart that i made especially for you and it is the forward p e ratio of facebook. I am charting this relative to the other big competitors. Facebook frankly still undervalued according to the metric. Is that in part of why the share saw big gains this year. Michael in terms of the gain, you had really awful performance in 2018, you had a couple quarters in the back half of the year where they basically missed numbers. So it derated pretty profoundly. I would say, if i look at even the reaction to conceivably trying to block the integration, which could be obviously a precursor to trying to break up the company, i think you actually are seeing a reasonable amount of conservatism factored into the multiple. Since we launched coverage on the company, one of the tenants of our initiation basically was, we have never seen a more hostile regulatory environment. So i think truth be told, a lot of people were initially surprised that the stock did not react more negatively to the headline. There is an element of sort of them playing through if you look through a lot of the other names in big tech and the moves they have had this year. Taylor david, comment on some of those antitrust issues that michael was alluding to. Is there a case to be made for breaking up this company . David i am not an advocate of breakup but there is no question that the regulatory pushback this company is facing all over the world is really not like anything any company probably has ever seen. There is movement against google and to a lesser extent, amazon, and a lot of these places too but facebook is a company that , regulators are looking at in the eu, parts of asia, the United States, both parties here. It is true, despite the fact that they had a pretty good year on balance on their stock that they are still below their , high. They have been hurt by all these controversies that never seem to leave them. So maybe michael is right, you know, that it is factored into the stock. It is such an incredibly Profitable Company and they have such an incredibly good ad venue business that you have to give them credit for that. This is a company that its going to keep raising its revenues and profits. Taylor as an analyst who covers the company, do you like what the company is doing in terms of trying to integrate all those platforms together . Michael i mean, it greater cements their control and ostensibly why the government is conceivably trying to go after them . It likely does. They have definitely not had a lot of success to date monetizing messenger and whatsapp. A big part of why they have been so successful monetizing instagram is they have got this phenomenal targeting engine and they have this strong ad base in place. You can just do a better job monetizing any of these assets other than pretty much anybody besides google. Taylor michael, you talk about that, but one thing that struck out to me is Instagram Stories was effectively copied from snapchat. Do you get nervous when the big ad engine facebook is a product that was copied and not innovated from within . Michael i think if you look at what they have done, they have done quite a bit of emulation. Im trying to remember that expression, that basically the ultimate form of flattery is emulating. There are some things they have innovated on and there is a lot of just and its something thats classically happened in tech for years. Have i been consistently blown away with what they have come out within in terms of new platforms . No, i have not. But as david mentioned, they build a very good, durable ad business that performs for advertisers, that keeps the dollars coming in the door. Taylor that was david kirkpatrick, and Michael Levine of Pivotal Research. Apple also dominated the news in 2019 as its products were put squarely in the spotlight with the white house tariff threat. It was all part of the u. S. China trade story and demand overseas. It was the shocked apple system that sent investors scrambling. In a january letter to shareholders tim cook cut the forecast, we did not see the magnitude of the economic deceleration, china. Arly in chinas relationship with apple has been under the microscope all year. Apple might have an edge over its competitors when it comes to President Trump and possible tariffs. Despite a slip of the tongue earlier in the year President Trump you have really put a good investment in our country. We appreciate it very much, tim apple. Others go out and hire very expensive consultants and tim cook called donald trump directly. Taylor that may be paying off for apple in the long term when it comes to staying in washingtons good graces, like in november, when trump toured apples texas plant after that i plan iphone producer moved its plant from china. President trump weve made a great deal with south korea, but we have to treat apple on a somewhat similar basis as we treat samsung. Taylor now, apple just has to see if this relationship does indeed bear fruit. As for apples performance in 2019, i got perspective from gene munster of Loup Ventures and new Street Researchs Pierre Ferragu. Pierre this interview will take you back to the beginning of last year, when iphone sales came down very significantly. That was kind of the result of the very strong iphone x cycle in 2018. Iphone users are still around, they still love their phone, but the firsthand buyers is a group, is a population that is not growing much anymore. Because iphones are getting more and more expensive, they stick to their phone longer and longer. That created a very depleted amount of demand for the iphones in 2018 and 2019 and towards the end of 2019 today, what we had is actually a fairly successful cycle. That is why you hear so much conflicting feedback from the market and the value chain. On one hand, there are very obvious indications that the iphone 11 was very well received. People loved it. At the same time, you still see in the market an element of weakness. The fact that you have had 170 million iphone xs sold in 2018 and 2019, and that is a lot of phones that are selling. People who have them in hand are kind of relaxed with the idea of sticking to them a bit longer than they were in the past. Taylor do you agree that it has been a relatively successful upgrade cycle for apple . Gene yeah, relative to where we started the year, to kind of put some parameters on it iphone , started the year i would call it down about 20 , 16 , 20 . Now its probably going to be down a couple percent or flat unit growth. They dont break these out. You can back into it from the december quarter. Success in that context, absolutely, from where we came from. But i think the franchises still franchise still has significant upside in terms of expanding where they are at based on the next few years. I realized that is an out of consensus view. Not that iphone is going to have 25 Global Market share, but i think they can over this next three year cycle around 5g, can inch up some of their market share. Taylor how much of that Global Market share is highly dependent on china and frankly, beating out huawei over there . Gene a lot of it is. China is 17 of overall revenue. Mainland china is probably 14 . If you look at total units globally sold of smartphones, 15 torobably in that 20 range. Apple currently under indexes in china because it is an expensive product. I think what has really stood out over the last nine months for me relative to china and apple is not the fact that we have got some sort of agreement on the trade, but rather, how the Chinese Government, which is an important part about the chinese consumer, how they think about apple, how the Chinese Government has treated apple. Specifically, we watch social media over in china. We have always been surprised which is of course curated by the government we have been surprised that through this period, the Chinese Government has been neutral to supportive of apple. When we think about the opportunity around china, whether it is 5g or the current iphone cycle we think that apple , is unique in that it is on of the few Tech Companies that actually has a play which is , probably going to be china, one of the still best growth stories globally over the next several years. Taylor that was Pierre Ferragu of new Street Research and Loup Ventures gene munster. Still ahead which apps were the , most downloaded in 2019 . We will find out next. This is bloomberg. Taylor closing out a decade, 2019 has been a landmark year for mobile, with the rise of tictok and the launch of new Video Services like disney plus. Here to discuss this years big players in the world of mobile apps, executive Vice President of app annie. I think the key thing we saw from a download perspective is that the big, popular social and Communications Apps continue to dominate again in 2019. If you look at the top 10, you will see social apps were seven of the top 10 in terms of downloads, with facebook claiming four of the top five. Taylor one of those that caught my eye was tinder. How has tinders explosion changed the social media landscape . Danielle from a monetization standpoint, we are seeing that it is not just video and music apps that have done really well to monetize on games outside mobile. We are seeing that dating apps are starting to make their mark. Tinder claimed that number one spot in monetization outside of games. I think it is an indication of the natural social experience of what dating can its a social component, right . This ability to quickly communicate. In the case of bumble, you have to check out who you have been matched with within a certain timeframe or you lose those matches. There is also behaviors to bring people back. We are seeing more and more competition. Tinder has a huge lead but we are seeing so many apps in that space continuing to grow. Taylor what is interesting, and you have sort of hinted at this, is the ability to monetize. Some of the most successful apps that you have seen that were downloaded have that recurring revenue, that subscription model, which as we talk about on the show, is so important to investors. How are they able to be successful for a generation known for not wanting to pay for anything . Danielle i think its a matter of a value, right. If you deliver a great value for a service that is not a onetime fulfillment, it is built into the service and sort of expected. I think when you look at entertainment, you might be Binge Watching something, but you are coming back for the next show a week later, or in the case of music, people are listening to music in many cases that are subscribers day in and day out. Dating has a similar sort of like, people are using these apps really regularly over time. I think they have captured and delivered on an unmet need that people did not have outside. Taylor a lot of the subscriptionbased apps are within the gaming sector. That has really just taken off, the rise of this virtual sort of online gaming. Is that what you really see fueling growth as well into 2020 . Danielle gaming is interesting. overall in mobile, gaming drives about . 75 of every dollar that consumers spend. If you look specifically in games, typically in app purchases. People are buying gems or levels. Subscriptions just started to take off with things like arcade this year. Subscription i think is something to keep on eye on in 2020. We just started to scratch the surface with games. It is the one area that games is sort of behind on versus other categories. I think it will be a new opportunity for publishers to monetize games that may be did not lend themselves well to in up juices. Taylor my producer used to be a sports broadcaster producer. We talk about nine innings in a game. Where are we in those nine innings in terms of apps really being able to utilize engagement and monetization, as you think about sort of a wide variety of where we are . Danielle engagement is everything. So if you start with the factor roughly three hours a day in apps and of that about half of it goes to social, so that leaves roughly 90 minutes for everything else. Some of that might be transactional. You are potentially doing other activities, order me a ride, coffee, etc. , but then you have entertainment and so forth. Engagement starts to become a value of time spent. Maybe it is more important to have sessions. An app like snapchat tends to lead in terms of sessions per user versus facebook, that is really tremendously successful in terms of time per user. They offer different social experience. It is important to understand which of those metrics are generally correlated and associated with a happy consumer. Taylor one app we have not talked about yet, but we talk about a lot is tiktok. Huge growth overseas. Do you expect to see tiktok as successful in the u. S. . When does it actually take off here . Danielle it is phenomenal, the app has reached about 665 million monthly active users globally. We estimate in the u. S. , it is about 20 million. So it is starting, right. Keep in mind tiktok does lean , towards gen z and younger consumers. I think with 20 million users in the u. S. , we are starting to see some material and impressive adoption. People are also using snapchat in gen z especially in the u. S. , instagram, and so forth. I think we are already starting to see some compelling adoption of tiktok even here. Taylor that does it for this edition of the best of bloomberg technology. We will bring you all the latest in the day intech throughout the week. Tune in each day 5 00 p. M. New york, 2 00 p. M. In san francisco. Bloomberg technology is livestreaming on twitter. Check us out at technology and be sure to follow our global breaking news network at quick take on twitter. This is bloomberg. Carol welcome to Bloomberg Businessweek. Im carol massar. Jason im jason kelly. We are here at wingard bloomberg headquarters in new york. Carol happy 90th, businessweek. We celebrate without the magazine covered business through the decade. Jason in the headlines, boeing halting production of the 737 max, thats been granted for many months. We look at what really went long. Carol more from the bloog