Transcripts For BLOOMBERG Bloomberg Technology 20240714 : vi

BLOOMBERG Bloomberg Technology July 14, 2024

And double digits, softbank announced its second vision fun after its wildly popular first tech fund. How it is changing up the landscape. First, our top story, uber out with secondquarter results including a 5. 2 billion loss. Sales, bookings, and monthly users all missing estimates. Shares down to the lowest level since may. Here to crunch the numbers and break down uber eats an active users is Mandeep Singh of bloomberg intelligence. Payment fairly disappointing, what is your biggest take away . I think it was just a revenue miss, and part of that was related to the use of subsidies in their ridesharing business, i the food business. I think they have been using subsidies for a while. They have been seeing pricing pressure because uber eats is a very fragmented market. On the core ridesharing side, i think theyre doing fine. It is just the law of large numbers is catching up. To me, it looks fine. Emily i should add that the adjusted loss was lower than anticipated, 656 million versus the 979 million that analysts had estimated. Monthly users are below estimates. 99 million, the street was looking for more like 101 million. What do you make of that . Mandeep the fact is, uber is a global company. They may choose to focus on more regions more than others. This, to me, was a small mass. Its really the user subsidies that caused the big revenue miss. That is a sign that uber is more focused on market share gain. Lyft is trying to curtail their businesses. Lyft is not going to expand geographically. Uber is trying to take market share globally for ridesharing and delivery. What was a positive day yesterday, they beat across the board. Emily uber has lost against that they may today going into this. Do you see a path to profitability . Mandeep i think if you look at their core business, they give better disclosures than lyft. There was a sequential improvement. What it tells me is, if they wanted to make these businesses profitable, especially the mature businesses like the ridesharing business, they can do it. Right now, they are focused more on market share in terms of adding new services and using subsidies to gain market share, in food delivery, that is the big one. I think thats going to help them in the long run. Emily we are listening to the ubers Conference Call happening right now. Mandeep singh, thanks so much for that instant analysis. Sticking with uber results, we want to bring in tom white, with a neutral rating on uber and a buy on lyft. He joins me on the phone. , our otherttle guest. The same question to each of you, do you see a path to profitability . Tom yeah, we see multiple ways that management can move toward profitability. We see nearterm drivers in the form of reducing driver and rider promotions and incentives. We also think they are things they can do in terms of helping move the company toward profitability in the near to midterm. Longerterm, we see additional upside in the move toward autonomy as being a key component in reducing costs and moving companies more toward profitability. Emily except that autonomy is just so far out. Tom, you started to say that losses would decline next year. Uber indicated the price wars between them would subside. Why do you have different ratings on uber and lyft . Neutral on uber, buy on lyft. Tom first of all, thanks for having me. Our neutral view on uber really just comes down to limited visibility. Its a Company Fighting a lot of battles on a lot of fronts. On one hand, they have the big Balance Sheet and the scale to probably outlast a lot of players it is competing with. On the negative side, it is reacting and responding to a lot of the aggressive promotional activity from some of the ridesharing players and some of the Online Food Delivery players it is fighting with. It creates a situation where it is harder to get comfortable with forecasting the financials. We think it is probably pretty challenging for the Management Team themselves, to give investors of clear and specific and precise 12month view of where the financials are going to be. Our ratings are based on a 12 to 18 month time horizon and we think the visibility and the share gains in the north american ridesharing market are kind of over the edge. Emily so, assad, lets talk about food delivery, because on the call, theyve been focusing on the competition not just in ridehailing but in food delivery, seeming to indicate that is the super competitive part of the business now. Obviously, uber eats has competitors not just in the United States but different competitors globally. What is your outlook for uber eats and how it can boost or not boost the business Going Forward . Asad i think this quarters results really speak to just how competitive the food delivery landscape is, not just a mastic domestically, but internationally. Uber eats is competing with a whole host of competitors that are really wellfunded. Companies like door dash and postmates that have received large amounts of funding from deeppocketed investors like softbank that are not afraid to go after the market in a big way. That is to the detriment of profitability in the near to midterm and that is hurting Companies Like uber which is facing so much pressure from investors to show a Clear Pathway to profitability. In the nearterm, we are encouraged by some positive signs we see. If you look at the take rate, which is the commission that uber takes on growth transactions within food delivery, we have seen that trend upwards over the past three quarter sequentially. That is something we are encouraged by. We are also incrementally more positive based on signs of consolidation in the space with their rival door dash acquiring caviar. Is a positive development and when we hope to see more of. Talk about when we profitability, a lot of investors will point to autonomy and the future of self driving cars which uber and lyft are investing in. But isnt that just so far off that it is difficult to include it in any sort of near or midterm model . Tom i tend to agree with you. We think in five years, vehicles incar hi rideshare are still very much on the margin. A very select group and specific geographies with clear weather, not a lot of fog, so very much in the margin. The reality is that until the Technology Advances to a point where it can be more broadly and widely deployed, over will need uber will need a lot more human drivers, not less. That continues to be one of the big challenges for both of the platforms. How do they demonstrate a path to profitability by making sure that drivers are attracted to the platforms, but making sure they dont raise prices so much for consumers that it eats into the number of use services that people use them for. Emily never short of drama, uber versus lyft. Ussein, weand asad h will keep listening to the uber call and bring you headlines as we have them. The u. S. Is holding off on granting licenses to businesses to supply technology to huawei. Remember, the u. S. Has blacklisted huawei, prohibited u. S. Companies from sending Critical Technology including software and chips. The u. S. Was considering granting licenses to certain u. S. Businesses to restart sales to huawei, but now we hear that the u. S. Is holding off on granting licenses after china halted buying u. S. Agricultural products. A lot has happened in between. The u. S. Labeled china a currency manipulator and of course, the trade war between the two countries only escalating. This is one more ratchet up. We will continue to follow that story and bring you any updates as we have them. Coming up, facebooks ad network is creating major headaches for digital advertisers. Is the social network at risk of those ad dollars . Risk of losing those ad dollars . Check us out on sirius xm. This is bloomberg. Manager isbooks ad having technical difficulties. Several advertisers have told campaign ise ads crashing regularly, some say every month. According to advertisers, outages can last days at a time. One said there have been at least a dozen system failures in the last year alone and speaking of digital ads, the Justice Department is scrutinizing googles digital ad and Search Operations as authorities gear up a broad antitrust review of the market power of giant internet companies. Joining us to discuss is kirk wagoner and mark bergen. The doj storyth because this just crossed. We could assume google was at the top of the list. Mark looks like they are looking at google and googles business biggest business which is research and advertising. What we reported today is looking beyond the usual suspects of characters and rivals in yelp, oracle, they have been complaining about google for years. Sounds like we have reporting the doj is talking to other news publishers, other Ad Tech Industries that have complained more quietly about googles display advertising business. It is so dominant there, and they make the claims that google has been behaving anticompetitively. Google is being investigated, but we dont know if facebook is being investigated. Kirk if theyre looking into the broader ad industry, facebook is number two to google. Emily lets talk about the ad averages that sound pretty awful. It doesnt sound like theyre good for facebooks bottom line. Kirk no, they are not. And they are really bad if you are an advertiser. The whole point i was told to set the reason you do these campaigns is because you want to do them accurately. If a certain image or video youre pushing is not actually resonating, you want to be up to take that down right away and replace it with Something Else or put money behind a different ad that is working. When the system is down, you cant do any of that. Not only can you not start the new campaign, but you cannot adjust existing campaigns. That can lead to people spending money on campaigns that are not actually working. Emily it is down for days . Kurt it could be. Leading up to thanksgiving was kind of the Biggest Issue i heard. Black friday last year, you may recall there was a big outage that freaked everybody out because like friday is one of the biggest retail days of the year, to not being able to prepare your ad campaigns, it was a huge issue. Every year since then you have seen these with more regularity. That was the tipping people but it can be a long process. Point, but it can be a long process. Emily facebook statement and apologize for the frustrations this has caused. They go on to say they are committed to Getting Better. Put it in context for us. Obviously facebook and google are the biggest players, what in the digital ad business. What does it mean that now you have got the Justice Department investigating the way google runs the system. Do you think that will impact googles market share or give facebook an advantage or not . The ftc looked at google years ago and and dropped the case. The eu has a different approach to antitrust. The eu has turned on the idea that behavior affects the market. Not necessarily consumer harm because historically in the u. S. , google and facebook will say show us the consumer harm. A lot of people are talking about if the doj starts to change the definition there, that could be something that has a big effect on these companies. What you see in the eu, and we are still waiting for the is a have forced google to change business practices. If the doj can do that with google and facebook, then they might be able to change the market. Emily kurt, you are reporting on another issue with whatsapp flaws. Allowing hackers to manipulate whatsapp messages . That sounds scary. Kurt it sounds a little scarier than it is. I think of it more as a product flaw than a security flaw. You know how when you reply to an email, you can go down and maybe edit what the email you are replying to looks like . Its kind of that situation with whatsapp. You can reply to a message and change what the message looks like in your reply. It creates some concern for sure. Especially for Companies Like facebook and whatsapp that are battling fake news, its not the kind of product you want to have out there, the kind of feature you want out there, but its a little different than hacking in and changing the message. Emily perhaps explains facebooks response. It is false to suggest there is a vulnerability with the security we provide on whatsapp. Which is a big deal for whatsapp because it is the encrypted messaging Service Facebook likes to tout. For them, it is important for people to know that they dont see this as a security issue, but again, this could be a big issue for things like fake news. If i am doctoring what a message looks like, that could be misleading to people. In some parts of the world, that has caused some really serious consequences. Emily all right, while i am sure it will be just a couple more minutes before we have more google and facebook news. Thanks so much for keeping us updated. Kurt wagoner and mark bergen. Coming up, silicon valleys latest unicorn scale ai has secured 100 million in new funding. How the company is using the investment to teach computers to see even better, next. This is bloomberg. Emily netflix has signed the game of thrones creators to a multiyear theater and film deal work 200 million, according to reports. As part of the deal, they will no longer be producing shows for hbo where they were show runners and riders on game of thrones for its entirety and will work on projects exclusively for netflix. They were also reportedly in talks with disney and amazon. Artificial Intelligence Companies are spending millions of a year hiring people to teach dollars computers to see. Among their tasks, identifying photos so they can do the same thing. Its a costly process that could take anywhere from 10 minutes to a couple of hours. The startup scale ai wants to change up the process. The Software Company takes the first look at photos before passing them on to humans for review. It already has several customers uber, and the company has been valued at more than thank you so much for 100 million. Joining us. It gives the data they need what are you what are you doing for these companies . Ai is built on top of data requiree algorithms billions of examples of label data to be able to perform in a safe, reliable way. Aat we have done is build platform that allows these companies to get the data they need to be able to build these algorithms in a safe reliable way and they use the data to build their self driving cars. Emily what kind of data . What kind of algorithms are they building using your software . Alexandr one of the big problems and Machine Learning is perception, being able to fully understand the environment around you using Machine Learning. Weve prosperous a lot of data and for other companies, we process text data or tabular data, or speech data. Emily is the work you doing going to improve the safety of self driving cars . There is a lot of concern about how quickly they can come to market, even if they work some of the time, it has to be perfect. Alexandr even further than that, the work we do is critical to building safe autonomous vehicles, for example, because without the data we are able to provide to these companies, they would not be able to build algorithms that could perform in any manner that is safe and reliable. Emily so there are thousands of human beings necessary to do the job now. In the future, how much of that work can ai really take on . It certainly seems that there will always need to be some sort of marriage between humans and technology. You cannot eliminate humans altogether. Alexandr i definitely agree with that. I think ai is about augmenting humans with technology and making them more effective and more efficient using technology. In particular, for a lot of the problems that we work on where ai plays a critical role, you in self driving or medical imagery, etc. , you really want to make sure that humans are part of the process to ensure that the systems are performing safely and reliably. Emily so there are other companies that are trying to do what you do. Uber bought a Company Called money ai. Amazon has its own labeling services. What differentiates you from the competition and how does the market evolve . Alexandr i think one view we have taken is how do we solve it in the most tech enabled way possible . How do we use as much Machine Learning and technology on our side to make the process as efficient and high quality as possible . That is a very differentiated view. Many of the other efforts are much more human powered than technology powered. Emily do you have a view on which company will get a selfdriving car to the mainstream market the fastest . Alexandr unfortunately, i cannot really comment on that. Emily but you have a view. Alexandr i think it is very exciting that all these companies have Incredible Technology and it is Getting Better and better every single year. We are really getting closer and closer to solving the problem. Emily i have to ask, you are 22 years old alexandr i am, yeah. Emily you have been doing this for how long . Alexandr three years. Emily how did you get here at 22 years . Alexandr i was really lucky. Alamosup in los in new mexico, but was able to come out here in the valley and mark as a software engineer. That exposed me to a lot of these problems where ai and Machine Learning are really core. I went back to school for a year and after that year i dropped out and started this company. Emily should everyone drop out . Is it something you recommend . Alexandr i think if you know what you want to do, more and more these days, you dont need a degree to be able to accomplish what you want to do. People care a lot more about what can you accomplish and what are your skills . Ai, Alexandr Wang thank you. Coming up, the top story of the moment. Cooper shares taking after hours after big earnings miss. We will have more on that, next. This is bloomberg. Emily this is bloomberg technology. Im emily chang. Uber is out with secondquarter results, and they are not too pretty. After our shares still in the red following the companys sales

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