Spike this week. How the platform has tripled its User Base Since it picked up the cryptocurrency. As big tech races to control your living room, we hear from the brain behind amazons alexa. First, to our lead. Passedenate republicans their version, we explore the ways the proposed legislation could affect the tech industry. Take a listen. It was a round of applause for gop senators as they passed their version of a tax bill. Trump administration closer to its first piece of signature legislation. If they sent it to my desk, i promise all of the people in this room, i promise you i will sign it. I promise. I will not veto that bill. Tech companies have spent to make sure their interests are heard. Big tex stands to benefit in a few week ways. It would slash the corporate rate from 35 to 20 . According to goldman sachs, the tech sector already benefits from a 24 effective rate. Hordes of cashhe stockpiled overseas. Big tech stands to benefit from this legislation that allows them to defer taxes on foreign earnings until they bring them to the u. S. At rates of seven point five to 14. 5 , down from the current 35 . If we get this passed, we have to as a country, it is going to bring back 4 trillion back into this country, which right now cannot come back. In our view, it should be a repatriation. Andhould be a required tax so, you are not asking the people that have had earnings from their International Subsidiaries if they would like to bring back money. Current bill would be a voluntary repatriation. Telecom firms could win big if enhanced deduction for the Capital Expenditures make it into the final bill. The radically allowing them to for now, the waiting game goes on until the final bill hits the president s trophy. Desk. Administration wants Tech Companies to bring back their overseas stockpiles of cash and keeping Companies Like apple from fleeing tax havens like ireland where apple reached a 15. 4 billion deal. Lets startd now, with the actual rate. It is a lower effective rate, but the effective rate is already fairly low. How much of an impact is this going to have . Every business wants lower taxes. That is clear in all of the debate about the tax legislation this year. Companies in and out of tech are happy to have a lower tax rate, even as a lot of companies are not paying the 35 statutory rate because of tax rates. Emily how much money will this ring back . Bring back . Them not sure where he got 4 trillion. There are several million parked offshore that are considered permanently reinvested. But you have seen the ways Companies Like apple have done self repatriation. Apple has 250 billion parked overseas, but is also borrowed 100 billion in the last few years to do things like buying back their shares, issuing dividends, things like that. You can look at that as a way to repatriate money without paying tax, which is what apple might be able to do under this proposed legislation. There are concerns about stock option legislation. Where are we . A startupically communitys worst nightmare. This wasout and saying a version in both houses for a while that looked like it would force start up companies to pay taxes on restricted stock in immediately, even before they were able to sell the shares. An undued have put burden on a lot of corporate workers here in silicon valley. Emily what you make of the deal apple has made. They have come to terms on an escrow fund to pay back taxes they say they oh. Dispute over irish taxes with apple is going to carry on for many more months. Year, theember last eu antitrust authorities said to ireland, you have improperly given apple a tax break that has allowed the company to avoid Something Like 15 million worth of taxes over the years and you have to go get that back from ireland. There is basically a dispute about what to do with the 15 billion while ireland, apple and the eu fight about that money. Emily how do you expect this to play out . In litigation be for a while. For a company of apples scale, 15 billion is not a big burden. Emily this week, prominent tech accused of has been Sexual Misconduct and the said he is taking a leave of absence from his responsible responsibility at emergent hyperloop one. Were amen said they sexually assaulted or harassed by him. Current and former colleagues of a sixth woman say he groped her at an uber holiday party. He has sued the definers, a Research Firm firm found did founded by republicans. They have responded to the suit saying they have nothing to do with the accusations and the suit should be dismissed. In a statement, he wrote as the legal case progresses, it is my responsibility to make the family is not adversely affected. I and confident i will be vindicated. Google won dismissal of the california action lawsuit saying the company systematically paid mail employees more than females. Was written that this does not distinguish between women who have valid claims from those who do not. She allowed the women to file an amended complaint. The new complaint will make clear that google violates the equal pay act by paying women less than men for substantially equal work. Coming up, just days away from its debut, bitcoin kept climbing this week. How futures could impact the online trading platform. That is next. If you like bloomberg news, check us out on the radio. You can listen on the Bloomberg Radio app, bloomberg. Com and sirius xm. This is bloomberg. Emily bitcoin continued to climb this week. It was selling for less than 1000 at the start of the year. In recent days, several exchanges have come out with news on offering bitcoin futures. Ontalked to Brian Armstrong wednesday. When base is an Online Platform that allows users to buy or sell by using their bank accounts. It now stands at 13 million accounts. There has certainly been a big influx in new interest in Digital Currency. Part of that has been driven by institutional money getting interested in the space. Most of the large derivative exchanges out there starting to say, they are going to list it bitcoin futures. Big signal that traditional Financial Institutions are starting to move into Digital Currency. Emily what does it mean for you . Does it create new challenges . It is a big endorsement of the Digital Currency space as a willasset class that more trade. It specifically means we offer data to a number of providers or are discussing it with them. We run the largest Institutional Exchange in the United States for Digital Currency. We are offering a can step custodian product where a lot of investors need a way to six store digital conservancy on behalf of their lps and clients. We launched a product for quinnbased custody. Emily are you at all worried your clients might decide to work with traditional main street wall street Companies Rather than coin base . Brian it is certainly an option. There will be more people involved in the Digital Currency space, and i think that is a good thing. There is going to be a diversity of players out there. There will be a lot of winners. Digital currency is moving so fast that i think a company dedicated to it with 200 people who have built up this Industry Knowledge over the last five years will have a competitive advantage. Emily you have been experiencing a glitch, as you have with prior surges. Why does this happen . Brian in a word, hypergrowth. We have hired from 40 Customer Support agents to 220 or so this year. By the end of next year, we will have another 400 in addition to the 200 . Brian yeah, and we launched phone support this year. We are going through a period of growth that is almost never seen in business. It is really difficult to be able to keep up with this amount of demand and we are not servicing our customers to the level they deserve at the moment. That is frustrating to see but it is my job from the top to ensure we get that. Emily can you inch explain why that happens . Is it a glitch, a crash, what is happening technically . Brian it is just a huge influx of new customers. Our trading volume, new signups, it has gone about 8x since june of this year. It is difficult to plan for that kind of capacity. Emily it is literally that you dont have enough humans behind the scenes to receive these complaints . Brian correct. Emily in addition to hiring new people, is there anything else you can do . Brian improving the product is the way to ring reduce the number of Customer Support tickets inbound. The team is working on that. The metrics we are looking at is average time to customer response, the core metrics we are looking at to make sure we are meeting demands. Concerns you have any this will reduce trust among new customers . You will lose your customers as a result . Brian i do have that fear. It is difficult to go through this rapid growth and maintain the same level of service. We have been watching those metrics and they are not where we want them to be. Growth is a really high quality to have, but it doesnt mean it isnt a big problem. Especially in Financial Services, we are held to a higher bar. We are storing peoples money and people are right to call us to a higher standard. The irs has been asking more information about your holdings and profits. What are you hearing from your clients about this . The irs sent us a subpoena for all customer records over a several year. Pushd push on th back on that strongly. The judge gave us a big vote of confidence and reduced the scope of the request by 97 . It wasnt down to zero where we think it should have meant for something that brought, but it was a partial victory. Longterm, we want to help people pay all of their taxes on Digital Currency gains. This should look like Something Like fidelity where everyone gets 1099 statements. It should be that simple. The irs nowng with thankfully to make sure we come up with a solution where everybody pays their taxes. This is one of those new areas Technology Keeps finding a new box that doesnt fit into the framework perfectly and we need to work with everyone to make sure we get there. Emily as you work this out, are you giving advice to your clients about how to report gains to the irs . To stay away from any tax advice since that is not what we do, but we provide a report to our customers, a cost basis report they can send to their accountant. That is the interim solution until there are 1099s. Emily lets talk about what is happening to some of these other cryptocurrencies. What do you see happening with the cerium versus bitcoin . They evolved down different paths. Bitcoin used to be 90 of the market cap in cryptocurrency and it has come down quite a bit. Bitcoin is ending up, in my mind, being a little like digital gold. Oldest cryptocurrency, the one people flee to in uncertainty. It hasnt become a Payment Network with the transaction put through people might want. Ium is doing more transactions per day than bitcoin. Newlso has a new concept of programs. Coin, you can think of whereas this is almost a Program Language where you can run any software and running on a global computer. That is a mindbending concept but it is much more programmable. Emily you have launched a new app called toshi, which seems like an app store. What are you trying to do here . Brian the analogy i like to use is the internet. When it started, you had it was really difficult to use. A browser came out on top with netscape and made it easy for anyone to build an app and access the internet. We are doing the same thing with is a browser for the network. We are trying to make it easy for a developer to use the app to develop an app endusers. India, even in kenya, mobile money is a big deal outside the United States. People in emerging markets could actually use Digital Currency to get access to Financial Services through Something Like toshi. Emily when it comes to the price, how do you see Bitcoin Ethereum . You see it surpassing bitcoin . Brian i dont like to give investment advice, but bitcoin has a certain amount of scarcity builtin. There will ever only be 21 billion million coins. Ereum has taken a different approach. It might target two to 3 inflation per year. They are deciding what it will be. Is not ethereum is not trying to be like gold, it is trying to be more programmable. One more broad thing you could look at is where are the users going . Where are the developers building the new apps . I see more Developers Building Apps on top of ethereum today, so that is one factor that could point to what he will be in the future. Emily we talk about this a lot on bloomberg. His bitcoin a fraud or not . Are we in a bubble or not . If it is not a fraud, is it a bubble . Brian i dont think it is a fraud. It is it is it a bubble, maybe. Had a new plateau each time it comes up and it comes back a little bit. We are going through the most recent runup period, the fourth for us as a company. I expect it to correct at some point, but continue over time in an upward channel. Emily there is an update called segue which would speed up transactions. When do you plan on implementing that . Brian it is probably not in the next top five things customers are requesting. People want more assets on the platform, they want a better experience, meaning identity verification, higher limits, the sign up on boarding experience, and they are asking for these new. Products. Institutional customers are asking for a custodian product. People are looking to trade more assets, have a better experience and trade more securely. Ceoy that is coin base brian on strong. Numbers that beat across the board as it tries to make the biggest takeover in tech history. This is bloomberg. Emily google is ramping up for a hiring spree, recruiting thousands to reduce inappropriate videos on youtube. Restrictions on advertising and making greater use of smart technology. By 2018, google aims to have more than 20,000 people to review questionable videos on the platform. The announcement comes as youtube looks to bounce back from a string of embarrassing incidents of questionable content discovered on its site. On the earnings front, broadcom beat across the board in the Fourth Quarter and gave an upbeat forecast. As the chipmaker attempts the biggest deal ever with an acquisition. We are joined with more. Up lots ofe gobbled different parts. Potentialned the acquisition, but they have already gaveled gobbled up some big parts of the Semi Conductor world. Buyinggo avago iphone. That company also dominant in the storage business. The results we see today from broadcom, looking back at the quarter that ended in october, really strong iphone business. Really great strength in gathering more and more silicon not in the old iphone, but the new iphone. We see that business showing up in the results. 17 yearoveryear growth in the Semi Conductor spaces very strong. Emily we have seen the danger of relying on apple as a customer. How much does broadcom . It is absolutely the most important customer. Broadcom has been successful at getting apple to pay whereas others havent. Broadcom has been able to add more real estate in the phone. Interestingly, the quality of the phone calls apple likes to boast about, remember how crummy the phone was when it first came out . It was actually hearing the calls was more difficult. Broadcom has a great chip that sits at the bottom of the radio chip and helps us to listen a little better to the signals that come in through the phone and understand what we are saying to the phone. It helps power siri. Those chips are important to apple and they are relying on broadcom. What we dont know yet is how successful they have been selling new routers, selling into servers think of the companies and technologies that are struggling now. Hewlettpackard having horrible problems, cisco barely coming out of a turnaround having trouble selling hardware. Oracle struggling. Business, having a really hard time. Yet we see the growth in amazon web services, microsoft as her, googles efforts in the cloud. What we see is people they may be buying chips from broadcom themselves. That is what i want to hear about the calm in the conference call. What success are they having selling into the white box manufacturers at amazon, microsoft and apple and facebook. Emily what update will we get, if any, on the progress of this potential takeover . A lot of swimming upstream for broadcom. There is a lot they could do to sway the market, that would be to talk about financing and how they perform this. Guidance is nebulous. Will, in the future, we see margins go from 60 to 65 . Cashll see increased flows and percentage of net income. We will have a much opponent financially stronger business. They are saying it will go from really good to really great. I dont know if we believe them. They dont have a history of missing targets. It is typical to give us a time frame in guidance. They are saying it eventually. Nevertheless, it suggests they see great things for this business and would give them the Financial Leverage to do an acquisition. Bloombergs cory johnson there. Still ahead, the brains behind amazons alexa. You can check us out at bloomberg tech tv, 5 00 in new york, 2 00 and san francisco. This is bloomberg. Emily welcome back. I am emily chang. In 2014, amazon introduced the echo, a new device designed around your voice. The echo and alexa was for amazon prime numbers. That changed in 2015 when they were introduced to the general public bringing ai into our living rooms. We caught up with amazon had scientist for an exclusive interview. The set of skills will improve daily communication. E