Transcripts For BLOOMBERG Best Of Bloomberg Technology 20240

BLOOMBERG Best Of Bloomberg Technology July 14, 2024

What slowing economy . Chinese Online Retailer alibaba defies the slowdown amidst a trade war with sales surpassing expectations. First to our top story, it was a big week for tech ipos with fleet work and cloudflare filing to go public. The Web Security Company cloudflare has been in the news lately, given its relationship with controversial message board, 8chan. Three alleged gunman posted manifestoes on 8chan before three separate Mass Shootings in the united states. Cloudflare stop providing services after the latest shooting in el paso, left two dozen dead, largely taking the platform offline. So, is now the time to go public for cloudflare . I discussed it with Liliana Baker and will curtain. Like many other tech ipos, especially in software, it is not profitable. It has a pretty good growth rate though. Its really trying to look at its competitor, fastly. Fastly went public earlier this year and is doing ok. There have been some sources who were asking me why cloudflare took this long, though, to get to this point and prepare their filing. They had been preparing since the fall of last year for a public offering. Emily right, cloudflare is a company, a name weve heard often in conversations about companies that will go public soon. It did not happen until this filing. Tell us exactly what cloudflare does. In the case of a company like 8chan, they basically protected 8chan from being taking down in denial of service attacks. Will right, so one of cloudflares most popular and wellknown products is ddos prevention service. It protects a website from a denial of service attack, anyone looking to attack the website and take it offline. They offer the service to tons of websites on the internet. They think of themselves as a utility. When you have the service it is the most effective or one of the most effective ways to protect your website from attacks like this. Emily right, and this is where 8chan comes up because cloudflare did not cut off 8chan. The site was still operational until just days ago after that shooting in el paso, texas. Liana, talk a little bit about what cloudflare says about 8chan and how investors might take that. Liana its listed as a risk in the filing. This has gotten a lot of attention because its buzzy, its relevant in the headlines, but i think that cloudflare was really aiming in its filing today to show the world how its financials are doing and what its prospects are. So i think it did a good job of putting it out there that this is a Solid Company that serves the backbone of the internet. Theres been pentup demand among investors for these sorts of companies to hit the market. A few weeks ago, medalia went public. Crowd strike has a good valuation a couple months after its ipo. So, i would say cloudflare today really is just trying to associate itself with some Successful Software ipos from earlier this year. Emily that said, cloudflare only made news when they made bad news under criticism that it helped keep some of these websites afloat. If you go back to 2017, and what happened in charlottesville at the time, cloudflare was under fire for helping support a neonazi website, the daily stormer. And it was only after much criticism that they finally took that website down by cutting off service to it. I spoke to the ceo, matthew prince and talked to him about some of their general policy of trying to remain neutral when it comes to content online and the websites that they service. Take a listen to what he said to me then. Matthew we turn to the experts in terrorism and illegal content which is law enforcement, legislators, regulators. We say here is this content and what would you like us to do . That feels like due process, that there are actually politically enshrined organizations that can make these decisions, as opposed to these decisions being made on the political whims of me or Mike Zuckerberg or jeff bezos. Emily now, when it came to 8chan more recently, it was several hours after that shooting in el paso that cloudshare said alright, were cutting them off as well. In a statement at the time, prince said theyve proven themselves that lawlessness has caused multiple tragic deaths. Even if 8chan hadnt violated the letter of the law and refused to moderate their hateful community, they have created an environment that revels in violating its spirit. Will, expand on the context. Very complicated issues. Were seeing companies, facebook and google grapple with what to leave up and take down on their platform. For cloudflare, its a slightly different story. Will so, cloudflare is in a really difficult position here. They dont want to make content decisions. Like i said earlier, cloudflare thinks of itself as a utility. The product is so good and it is hard to find other comparable products. So, when you do not have cloudflares ddos protection, it might be difficult to stay online. What that means is cloudflare basically can decide who gets to be on the internet. They dont want to make those decisions. And as youve seen, theyve only made that decision twice in removing daily stormer and 8chan. Its a really difficult position, and when you do things like remove 8chan and remove the daily stormer, then you get material to say why not remove this website or whatever other website that has vile content on it . So, i dont think this is a business cloudflare wants to be in. They dont want to be deciding whats on the internet and whats not. Emily wework also officially filed for its ipo this week, expected to raise about 3. 5 billion. That would make it this years secondlargest ipo behind uber. Wework revealed a loss of 69 a loss of 690 million in the first month and 3 billion lost in the last three years, along with some unique business dealings by the ceo. Ellen hewitt had all the details. Ellen anyone who has been following wework closely knows they have been giving out select Financial Information quarterly for the last year or so. We knew that in 2018, they lost close to 2 billion while making revenue of around 1. 8 billion. There were some surprises we got more details about some of the loans and complicated financial structures that go on between adam newman and the company. We have gotten some knowledge about this before. He was famously been a landlord but we also got information about loans the company has made, the Succession Plan that would happen if he could no longer able to serve as ceo. Emily our colleague, shira ovide, called the Office Leasing company on steroids with a complicated corporate structure. Theyre offering three classes of stock. One with 20 times voting power as another. Which takes it even a step further than what Mark Zuckerberg and the founders of google have done. Ellen right, there are actually three classes and two of them have 20 votes per share. Class a has one vote per share. As you would expect, thats a great consolidation of power. Its largely in the hands of adam newman. He has a lot of voting control over the company. That is kind of by design. People who support the structure think that adam has the right vision, the boldness, and the leadership to take wework even farther than it has been. For some of the people, they will look at that and raise their eyebrows thinking that might be too much. Emily now, the other thing thats interesting is that they laid out exactly how many of the buildings are fairly new. 30 of their locations are mature. 70 are two years or younger. The vast majority of their space is incredibly new. Ellen theyve changed the definition of that metric of a mature location. It used to be 18 months, they have expanded to 24 months. Even with that, its only 30 of their Office Location have been open for more than two years. They look at that as pointing to highgrowth. Exactly. Like, look how fast we are growing. But its also interesting because a lot of the most stable Unit Economics they like to highlight are focused only on mature locations. They say these are where we no longer have to rely on marketing to fill the buildings. But when you start to realize thats only 30 of their portfolio, it starts to raise some questions about how sustainable their growth is and how easy it would be for them to get to profitability if they stop growing. Emily and they say they may never be profitable, which is similar to what we heard with uber and lyft. How are investors feeling . Are they excited . Ellen we see a lot of activity on twitter on both sides. Some people think the growth is exciting and others cannot wait for it to go public so they can short it. It will be a divisive stock. Well see the price will be decided soon by the public markets. I think a lot of people are looking to see if it will meet that 47 billion private valuation. Emily so how quickly do we expect them to get to market . When does the roadshow launch and all that . Ellen sometime in the next few weeks. We expect and have reported that we expect a september ipo. Thats just around the corner. Emily that was bloomberg techs ellen hewitt. Coming up, thumbs up. Redstone cements her status as the most powerful woman in u. S. Media with cbs merging with viacom. And if you like bloomberg news, check us out on the radio. This is bloomberg. Emily cbs has merged with viacom. The deal unites the mostwatched u. S. Broadcast network with the parent of Paramount Pictures and cable channels like mtv and nickelodeon. It followed a marathon negotiating session and the two sides hashed out a price. I got details with lucas shaw. Lucas they finally realized that after two or three years are going back and forth that whatever misgivings they might have had, they both just needed to get bigger so they can compete in this streaming war. Over the past two years, we have seen at t by time warner and time warner sell out to at t. Weve seen fox and the murdochs sell a lot of their assets to disney. And now most of the companies that are playing in Media Entertainment are Companies Worth 100 million, 200 million. If you count Companies Like apple and amazon, 800 billion, 900 billion. Cbs and viacom, even combined, theyre worth only about 30 billion. But by coming together, they have a deep library that will get much stronger. Emily so, how does this position, this now combined entity, against all of the other newly merged now larger Media Companies . Lucas you know, its still small in comparison. Most analysts and investors believe there are probably more deals to be made. I spoke to the ceo of the combined company and he acknowledged that more m a is likely. Theyve been linked to Companies Like lionsgate, discovery. Its possible they might merge with one of them. Its also possible that the redstone family, who will own control the combined company, say its now time to cash out. They might take a couple assets weve seen, but it might be stronger and might be able to entice some Larger Company to scoop it up. Emily that was bloombergs lucas shaw. After details on the newly merged companies and strategies, we heard from viacoms ceo who sat down with bonnie quinn in vonnie quinn new york. Bob we were thrilled that we announced the combination of viacom and cbs, creating a leading platform. When you look at the assets, it unites the powerhouse cbs, a station operator, a syndicator, the studio with Paramount Pictures, one of the most storied studios in hollywood. Global brands in nickelodeon, mtv, comedy central, and bet. They have shaped culture for 40 years. And, of course, showtime. A Premium Service that is pushed the boundaries of storytelling. Weve created an incredible asset base. This was a deal that was negotiated by two special committees and went through a diligent and thoughtful process. And again, the critical thing is we got the deal done because it positions us to do great things. Vonnie no question it was a phenomenal deal for both sides and there was a willingness to get it done, yet some shareholders are nonplussed that viacom is not valued more. Would cbs have given in eventually . Bob again, this deal was conducted by two independent committees of independent directors. When you need to focus on is the value created potential. These are two companies valued at particularly low multiples. A lot of that was due to the uncertainty hanging over them. Also, a lack of clarity on the path forward. Starting yesterday, we started talking about a threepart Growth Strategy really building a significant business through a combination of cbs subscriptions, where they have millions of subscribers between cbs all access and ott. Plus, viacoms ad supported structure with pluto tv being the leading Free Tv Streaming Service in the u. S. Up 50 since we bought it. Putting those together, you have an ecosystem. We love that and will be a very significant partner with ads, distributors, and a huge content supplier. Very exciting Growth Strategy going forward. As that tracks out, people will see the material value here. Youve also identified 500 million in cost savings. Some of those will be job eliminations. Can you give us any more detail on how many and where . Bob sure, when you put two companies together, people talk about synergies. Those numbers you reference is a cost number. It includes organizational costs and sourcing benefits. Some real estate benefits. Beyond that, we havent gotten into it. I think the more important thing to focus on is the power of this combination is going to create incredible value for all of our stakeholders, including the incredible employees of viacomcbs. They will shape the future of media. I think thats what people need to focus on. Emily viacoms Ceo Bob Bakish there. Coming up, softbanks massive fund makes its first ever Energy Storage bet. We find out what energy vault is with the ceo. This is bloomberg. Emily softbanks massive vision fund made its first ever Energy Storage that, investing in energy vault. This company stacks concrete blocks in a tower that can store and release energy. It is presenting the system as a bigger and more affordable solution to lithium batteries, claiming it can supply electricity to the grid 24 hours a day. To discuss what this means for the Energy Storage market, i sat down with the ceo. Weve designed a very new, innovative system tower. It includes a six arm crane and 35,000 metric ton bricks that are all orchestrated and raised and lowered with a proprietary software stack, so thats the whole system integration. What we do is we take excess energy from solar or wind when its produced and not needed. That energy is used to raise the blocks. And when the energy is needed by the grid, we lower those blocks and discharge the energy. Emily and how widely deployed is this . It says youre on four continents. Robert correct. Weve had a working model for the last year in switzerland. In addition, were building our first commercial scale unit in the Fourth Quarter in the north of italy. As we announced, many, many customer engagements on many continents. Were excited. Emily what do you think the draw is for softbank . Robert they share our vision for renewables and understand how important Energy Storage is to make renewables real and make renewables solve the problem of our reliance on fossil fuel. They own an energy company, so they own an Energy Generation company, so they understood this beyond just being an investor. They share our passion to be to solve this problem. Emily so this system, as we saw there, relies on this giant Automated System that has to work reliably outside in the elements year after year after year. It seems like a lot of moving parts. Do you have concerns, or is there a risk that some parts might not function properly given all that exposure and throw the whole things off . Robert actually, thats one of the beauties of innovation. The technology were leveraging fundamentally is proven physics. Were leveraging unique material science working with one of the Largest Materials Companies in the world, so were actually not using normal concrete. Were using a material composite for 95 of these bricks and raising and lowering them, so the fundamental core physics is known. Where innovation comes in is with the proprietary Machine Vision software that fully automates the tower, as well as a lot of other innovation we thought of from a sustainability perspective. This last point is important. So, in not only the materials, we can use the soil right from the site we excavate locally to make these bricks, so we dont have bring in trucks, materials. Were not spewing omissions with emissions with trucks coming in or other transportation elements coming in, and from a sustainable perspective, we use some of the suppliers in a Global Supply Chain Ecosystem that exists today, so we can do it now. Emily now, weve seen lithium ion batteries start to be attached to the energy grid, but often they can only supply energy for hours at a time. How long can your system . Robert sure, thats another one of the innovations, longduration. So, while we can support four hours of storage, we can also do 812 hours. Why is that important . We cannot only meet the time requirements of utilities but think about manufacturing companies. Industries and industrial processes that rely on the power 24 hours a day. Desalination plants are a great example. They need power to make Drinking Water 24 hours a day and we can now provide them for the first time that power. Emily now, weve seen a lot of pushback from local communities against giant solar power plants, large wind farms because of the fact that they dont look attractive. Do you run the risk of that, as well . A large concrete tower, while it might work, it might not be the most attractive Online Retail<\/a>er alibaba defies the slowdown amidst a trade war with sales surpassing expectations. First to our top story, it was a big week for tech ipos with fleet work and cloudflare filing to go public. The Web Security Company<\/a> cloudflare has been in the news lately, given its relationship with controversial message board, 8chan. Three alleged gunman posted manifestoes on 8chan before three separate Mass Shootings<\/a> in the united states. Cloudflare stop providing services after the latest shooting in el paso, left two dozen dead, largely taking the platform offline. So, is now the time to go public for cloudflare . I discussed it with Liliana Baker<\/a> and will curtain. Like many other tech ipos, especially in software, it is not profitable. It has a pretty good growth rate though. Its really trying to look at its competitor, fastly. Fastly went public earlier this year and is doing ok. There have been some sources who were asking me why cloudflare took this long, though, to get to this point and prepare their filing. They had been preparing since the fall of last year for a public offering. Emily right, cloudflare is a company, a name weve heard often in conversations about companies that will go public soon. It did not happen until this filing. Tell us exactly what cloudflare does. In the case of a company like 8chan, they basically protected 8chan from being taking down in denial of service attacks. Will right, so one of cloudflares most popular and wellknown products is ddos prevention service. It protects a website from a denial of service attack, anyone looking to attack the website and take it offline. They offer the service to tons of websites on the internet. They think of themselves as a utility. When you have the service it is the most effective or one of the most effective ways to protect your website from attacks like this. Emily right, and this is where 8chan comes up because cloudflare did not cut off 8chan. The site was still operational until just days ago after that shooting in el paso, texas. Liana, talk a little bit about what cloudflare says about 8chan and how investors might take that. Liana its listed as a risk in the filing. This has gotten a lot of attention because its buzzy, its relevant in the headlines, but i think that cloudflare was really aiming in its filing today to show the world how its financials are doing and what its prospects are. So i think it did a good job of putting it out there that this is a Solid Company<\/a> that serves the backbone of the internet. Theres been pentup demand among investors for these sorts of companies to hit the market. A few weeks ago, medalia went public. Crowd strike has a good valuation a couple months after its ipo. So, i would say cloudflare today really is just trying to associate itself with some Successful Software<\/a> ipos from earlier this year. Emily that said, cloudflare only made news when they made bad news under criticism that it helped keep some of these websites afloat. If you go back to 2017, and what happened in charlottesville at the time, cloudflare was under fire for helping support a neonazi website, the daily stormer. And it was only after much criticism that they finally took that website down by cutting off service to it. I spoke to the ceo, matthew prince and talked to him about some of their general policy of trying to remain neutral when it comes to content online and the websites that they service. Take a listen to what he said to me then. Matthew we turn to the experts in terrorism and illegal content which is law enforcement, legislators, regulators. We say here is this content and what would you like us to do . That feels like due process, that there are actually politically enshrined organizations that can make these decisions, as opposed to these decisions being made on the political whims of me or Mike Zuckerberg<\/a> or jeff bezos. Emily now, when it came to 8chan more recently, it was several hours after that shooting in el paso that cloudshare said alright, were cutting them off as well. In a statement at the time, prince said theyve proven themselves that lawlessness has caused multiple tragic deaths. Even if 8chan hadnt violated the letter of the law and refused to moderate their hateful community, they have created an environment that revels in violating its spirit. Will, expand on the context. Very complicated issues. Were seeing companies, facebook and google grapple with what to leave up and take down on their platform. For cloudflare, its a slightly different story. Will so, cloudflare is in a really difficult position here. They dont want to make content decisions. Like i said earlier, cloudflare thinks of itself as a utility. The product is so good and it is hard to find other comparable products. So, when you do not have cloudflares ddos protection, it might be difficult to stay online. What that means is cloudflare basically can decide who gets to be on the internet. They dont want to make those decisions. And as youve seen, theyve only made that decision twice in removing daily stormer and 8chan. Its a really difficult position, and when you do things like remove 8chan and remove the daily stormer, then you get material to say why not remove this website or whatever other website that has vile content on it . So, i dont think this is a business cloudflare wants to be in. They dont want to be deciding whats on the internet and whats not. Emily wework also officially filed for its ipo this week, expected to raise about 3. 5 billion. That would make it this years secondlargest ipo behind uber. Wework revealed a loss of 69 a loss of 690 million in the first month and 3 billion lost in the last three years, along with some unique business dealings by the ceo. Ellen hewitt had all the details. Ellen anyone who has been following wework closely knows they have been giving out select Financial Information<\/a> quarterly for the last year or so. We knew that in 2018, they lost close to 2 billion while making revenue of around 1. 8 billion. There were some surprises we got more details about some of the loans and complicated financial structures that go on between adam newman and the company. We have gotten some knowledge about this before. He was famously been a landlord but we also got information about loans the company has made, the Succession Plan<\/a> that would happen if he could no longer able to serve as ceo. Emily our colleague, shira ovide, called the Office Leasing<\/a> company on steroids with a complicated corporate structure. Theyre offering three classes of stock. One with 20 times voting power as another. Which takes it even a step further than what Mark Zuckerberg<\/a> and the founders of google have done. Ellen right, there are actually three classes and two of them have 20 votes per share. Class a has one vote per share. As you would expect, thats a great consolidation of power. Its largely in the hands of adam newman. He has a lot of voting control over the company. That is kind of by design. People who support the structure think that adam has the right vision, the boldness, and the leadership to take wework even farther than it has been. For some of the people, they will look at that and raise their eyebrows thinking that might be too much. Emily now, the other thing thats interesting is that they laid out exactly how many of the buildings are fairly new. 30 of their locations are mature. 70 are two years or younger. The vast majority of their space is incredibly new. Ellen theyve changed the definition of that metric of a mature location. It used to be 18 months, they have expanded to 24 months. Even with that, its only 30 of their Office Location<\/a> have been open for more than two years. They look at that as pointing to highgrowth. Exactly. Like, look how fast we are growing. But its also interesting because a lot of the most stable Unit Economics<\/a> they like to highlight are focused only on mature locations. They say these are where we no longer have to rely on marketing to fill the buildings. But when you start to realize thats only 30 of their portfolio, it starts to raise some questions about how sustainable their growth is and how easy it would be for them to get to profitability if they stop growing. Emily and they say they may never be profitable, which is similar to what we heard with uber and lyft. How are investors feeling . Are they excited . Ellen we see a lot of activity on twitter on both sides. Some people think the growth is exciting and others cannot wait for it to go public so they can short it. It will be a divisive stock. Well see the price will be decided soon by the public markets. I think a lot of people are looking to see if it will meet that 47 billion private valuation. Emily so how quickly do we expect them to get to market . When does the roadshow launch and all that . Ellen sometime in the next few weeks. We expect and have reported that we expect a september ipo. Thats just around the corner. Emily that was bloomberg techs ellen hewitt. Coming up, thumbs up. Redstone cements her status as the most powerful woman in u. S. Media with cbs merging with viacom. And if you like bloomberg news, check us out on the radio. This is bloomberg. Emily cbs has merged with viacom. The deal unites the mostwatched u. S. Broadcast network with the parent of Paramount Pictures<\/a> and cable channels like mtv and nickelodeon. It followed a marathon negotiating session and the two sides hashed out a price. I got details with lucas shaw. Lucas they finally realized that after two or three years are going back and forth that whatever misgivings they might have had, they both just needed to get bigger so they can compete in this streaming war. Over the past two years, we have seen at t by time warner and time warner sell out to at t. Weve seen fox and the murdochs sell a lot of their assets to disney. And now most of the companies that are playing in Media Entertainment<\/a> are Companies Worth<\/a> 100 million, 200 million. If you count Companies Like<\/a> apple and amazon, 800 billion, 900 billion. Cbs and viacom, even combined, theyre worth only about 30 billion. But by coming together, they have a deep library that will get much stronger. Emily so, how does this position, this now combined entity, against all of the other newly merged now larger Media Companies<\/a> . Lucas you know, its still small in comparison. Most analysts and investors believe there are probably more deals to be made. I spoke to the ceo of the combined company and he acknowledged that more m a is likely. Theyve been linked to Companies Like<\/a> lionsgate, discovery. Its possible they might merge with one of them. Its also possible that the redstone family, who will own control the combined company, say its now time to cash out. They might take a couple assets weve seen, but it might be stronger and might be able to entice some Larger Company<\/a> to scoop it up. Emily that was bloombergs lucas shaw. After details on the newly merged companies and strategies, we heard from viacoms ceo who sat down with bonnie quinn in vonnie quinn new york. Bob we were thrilled that we announced the combination of viacom and cbs, creating a leading platform. When you look at the assets, it unites the powerhouse cbs, a station operator, a syndicator, the studio with Paramount Pictures<\/a>, one of the most storied studios in hollywood. Global brands in nickelodeon, mtv, comedy central, and bet. They have shaped culture for 40 years. And, of course, showtime. A Premium Service<\/a> that is pushed the boundaries of storytelling. Weve created an incredible asset base. This was a deal that was negotiated by two special committees and went through a diligent and thoughtful process. And again, the critical thing is we got the deal done because it positions us to do great things. Vonnie no question it was a phenomenal deal for both sides and there was a willingness to get it done, yet some shareholders are nonplussed that viacom is not valued more. Would cbs have given in eventually . Bob again, this deal was conducted by two independent committees of independent directors. When you need to focus on is the value created potential. These are two companies valued at particularly low multiples. A lot of that was due to the uncertainty hanging over them. Also, a lack of clarity on the path forward. Starting yesterday, we started talking about a threepart Growth Strategy<\/a> really building a significant business through a combination of cbs subscriptions, where they have millions of subscribers between cbs all access and ott. Plus, viacoms ad supported structure with pluto tv being the leading Free Tv Streaming Service<\/a> in the u. S. Up 50 since we bought it. Putting those together, you have an ecosystem. We love that and will be a very significant partner with ads, distributors, and a huge content supplier. Very exciting Growth Strategy<\/a> going forward. As that tracks out, people will see the material value here. Youve also identified 500 million in cost savings. Some of those will be job eliminations. Can you give us any more detail on how many and where . Bob sure, when you put two companies together, people talk about synergies. Those numbers you reference is a cost number. It includes organizational costs and sourcing benefits. Some real estate benefits. Beyond that, we havent gotten into it. I think the more important thing to focus on is the power of this combination is going to create incredible value for all of our stakeholders, including the incredible employees of viacomcbs. They will shape the future of media. I think thats what people need to focus on. Emily viacoms Ceo Bob Bakish<\/a> there. Coming up, softbanks massive fund makes its first ever Energy Storage<\/a> bet. We find out what energy vault is with the ceo. This is bloomberg. Emily softbanks massive vision fund made its first ever Energy Storage<\/a> that, investing in energy vault. This company stacks concrete blocks in a tower that can store and release energy. It is presenting the system as a bigger and more affordable solution to lithium batteries, claiming it can supply electricity to the grid 24 hours a day. To discuss what this means for the Energy Storage<\/a> market, i sat down with the ceo. Weve designed a very new, innovative system tower. It includes a six arm crane and 35,000 metric ton bricks that are all orchestrated and raised and lowered with a proprietary software stack, so thats the whole system integration. What we do is we take excess energy from solar or wind when its produced and not needed. That energy is used to raise the blocks. And when the energy is needed by the grid, we lower those blocks and discharge the energy. Emily and how widely deployed is this . It says youre on four continents. Robert correct. Weve had a working model for the last year in switzerland. In addition, were building our first commercial scale unit in the Fourth Quarter<\/a> in the north of italy. As we announced, many, many customer engagements on many continents. Were excited. Emily what do you think the draw is for softbank . Robert they share our vision for renewables and understand how important Energy Storage<\/a> is to make renewables real and make renewables solve the problem of our reliance on fossil fuel. They own an energy company, so they own an Energy Generation<\/a> company, so they understood this beyond just being an investor. They share our passion to be to solve this problem. Emily so this system, as we saw there, relies on this giant Automated System<\/a> that has to work reliably outside in the elements year after year after year. It seems like a lot of moving parts. Do you have concerns, or is there a risk that some parts might not function properly given all that exposure and throw the whole things off . Robert actually, thats one of the beauties of innovation. The technology were leveraging fundamentally is proven physics. Were leveraging unique material science working with one of the Largest Materials Companies<\/a> in the world, so were actually not using normal concrete. Were using a material composite for 95 of these bricks and raising and lowering them, so the fundamental core physics is known. Where innovation comes in is with the proprietary Machine Vision<\/a> software that fully automates the tower, as well as a lot of other innovation we thought of from a sustainability perspective. This last point is important. So, in not only the materials, we can use the soil right from the site we excavate locally to make these bricks, so we dont have bring in trucks, materials. Were not spewing omissions with emissions with trucks coming in or other transportation elements coming in, and from a sustainable perspective, we use some of the suppliers in a Global Supply<\/a> Chain Ecosystem<\/a> that exists today, so we can do it now. Emily now, weve seen lithium ion batteries start to be attached to the energy grid, but often they can only supply energy for hours at a time. How long can your system . Robert sure, thats another one of the innovations, longduration. So, while we can support four hours of storage, we can also do 812 hours. Why is that important . We cannot only meet the time requirements of utilities but think about manufacturing companies. Industries and industrial processes that rely on the power 24 hours a day. Desalination plants are a great example. They need power to make Drinking Water<\/a> 24 hours a day and we can now provide them for the first time that power. Emily now, weve seen a lot of pushback from local communities against giant solar power plants, large wind farms because of the fact that they dont look attractive. Do you run the risk of that, as well . A large concrete tower, while it might work, it might not be the most attractive Thing Companies<\/a> might want in their backyard. Robert actually, most of the markets, well be building this system. Its out where there are farms. Out in typically remote areas. Wind farms, where theres already turbines sitting up high, and the off grid applications which are pretty important for us to get power to remote farms, villages, etc. , to areas that that need power that cant get it from the grid. In those locations, we dont see a lot of problems. Emily theres not really another company that does this this way. What is the most challenging . What other company is working on this in a different way that might be the most challenging idea to what you have proposed . Robert the big thing that has not been solved until now are for the economics. How do you get renewable Energy Storage<\/a> down to price when combined with solar or wind, you can do it below the cost of fossil fuel . Thats really the major innovation. And weve done that through the material science, through thinking about design, and through sustainability. Thats, primarily, what were solving that no one has been able to solve. Emily you have other competing, crazy, bold ideas. Pumping compressed air underground releasing it to turbines. There are obviously a lot of different paths to get to the best results and create the most amount of energy at the cheapest price. I mean, what do you think makes this better than all of those other ideas . Robert sure, sure. Three main reasons. When we designed this, we didnt want to have this dependency on things like geology or geography or topology. Dams, for example, rely on mountains and things. We want to be able to deliver this everywhere, its so big, the problem were solving. Second, sustainability. Chemical battery companies, how they get the material, the batteries degrade immediately when you install them. So, through cycling, theyre going to degrade. Our system doesnt degrade at all over time. So, you have to solve this with innovation across material science, design, and thinking always about sustainability of your environmental aspects every day. Emily eenergy vaults ceo robert piconi. Coming up, a squirrel into tech. Were going to take a deep dive into the ftc probe of facebook next. And bloomberg tech is Live Streaming<\/a> on twitter. Be sure to follow our global breaking news network tictoc on twitter. This is bloomberg. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile<\/a> lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its a different kind of Wireless Network<\/a> designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you preorder a new samsung note. Click, call or visit a store today. Emily welcome back to Bloomberg Technology<\/a>, i am emily chang. We continue to follow washington on antitrust. The chair of the federal trade commission is weighing in. Joe simon said his agency is ready to get down and dirty of necessary. If you have to, you do it, not ideal because its messy, but if you have to, you have to. The sec is currently investigating facebook. This is one of the Big Tech Companies<\/a> being targeted by the trump administration, to discuss in washington, charlotte joined us. Before that, she was part of the anticompetitive practices committee. And before that she served as an assistant attorney general in the antitrust bureau of new york state. As well as terrelle pryor. If you have to you have to, thats almost proctology. I think when he is talking about is that it can be difficult to force significant divestiture, something we would probably break out. And in order to get that type of remedy in court, you need to show its necessary. Sort of a tautological comment. But i think thats what hes getting at there. Emily sally, would you agree theres certainly been a lot of questions given that the ftc fined facebook, but critics say that didnt go far enough. You know, do you agree that the agency has what it takes to make that leap if they have to . Sally i think he was just really stating the fact that thats a remedy that every antitrust enforcer needs to consider. I wouldnt expect it out of joe simons, given how he handled the facebook Consent Decree<\/a> violations and really just gave them a slap on the wrist. I know a 5 billion fine sounds like a lot, but it wont change anything or protect the American People<\/a> from privacy abuses. I dont expect anything aggressive out of this administration, however these investigations take a long time so it might not need joe simons making the decision on the proper remedy. Or different type of contact. Emily meanwhile, you have a new piece out in Bloomberg Businessweek<\/a> that speaks to how facebook has evolved under scrutiny from regulators after this penalty was levied by the ftc and your assessment is facebook is only getting stronger. How so . Sarah if you think about it logically, data is the most important part of the Business Model<\/a> and thats what is at the bedrock of 70 billion advertising businesses. The ftc telling facebook its important that you do not share your most valuable asset with any third parties, and facebook already buttoned it up. They already dont want to share data with third parties, they understand that owning the network and owning a Much Bigger Network<\/a> and making that bigger is most important thing for the future of their business. So really, what ftc did was let the company continue on their current path and do things that are anticompetitive, like the messaging app. Emily first of all, would you agree with sarah there . Charlotte sure, i think thats a major concern. Something i was hoping the ftc might do is have requirements for interoperability with competitors. That is data sharing but it allows competition. Emily at what point do you think the ftc would say, this is a company that needs to be broken up . Whether its facebook, and joe simons spoke to amazon and the issue around thirdparty sellers. Sally so, you know, it takes years of investigation before an enforcer will breakup a company. In our history when its been done, its taken time. It may be after the 2020 election and we could have a different Decision Maker<\/a> making the ultimate decision. And the concerns he voiced about amazon are also very important, that its not allowed to enforce rules it said it was going to do in terms of enforcing low pricing. Emily how concerning is the amazon issue in your mind . Charlotte well, the ftc certainly wants to make sure that competition is happening fairly on the amazon platform, so small retailers ought to be able to compete and not worry that amazon will anticompetitively interfere with them. So, i think thats the type of thing the ftc is going to be looking for. Emily in response to the ftc penalty on facebook, alex stamos, the former chief Security Officer<\/a> at facebook, had a pretty striking tweet, saying i cant believe facebook didnt pay more for this, if the ftc ordered amazon to help consumers make money. Bezos would leap across the table with a 10 billion check and a massive grin. What does he mean by that . Sarah he means basically that this is a valuable asset and facebook is no longer able to share so its good to have this rule in place. Facebook of five or seven years ago that resulted in cambridge analytica, thats no longer how it works today. They are no longer making personality quizzes and games that operate on facebook, that used to be necessary to bring in more users. But in this current world, facebook no longer wants that. Facebook mostly wants to keep that network for itself. Emily you just came out with a fascinating piece yesterday about how facebook contractors are listening to audio of users talking over Facebook Messenger<\/a> and today, the story about facebook only getting stronger. Sally, im wondering why dont these bad news stories hurt facebook more than they do . Sally i think the reason why the bad news stories dont hurt facebook is because the enforcers are not making a change to its business practices. So, when it got the fine and it was just a fraction of its annual revenue and its able to keep doing what its doing, mining users data in a way they dont expect, that settlement was a win for facebook. Until an enforcer actually makes them change their business practices, they will not be effective. Emily what is your view of how this investigation will play out, as well as a potential investigation into amazon . Charlotte so, of course its hard to predict. We dont have access to the nonpublic document that they are reviewing at the ftc, but we should not expect it will lead to huge changes. The track record is not strong on that, and antitrust is a narrow and difficult area of the law. So actually, our hope is that there will be a new agency with new regulatory powers, in addition to antitrust, and i think thats how we will address the power that facebook has. Emily that was sally hubbard, charlotte slaiman, and sarah frier. Coming up, tencent revenue falling short amid the chinese slowdown, but alibaba has room to run, reporting betterthanexpected results. Next. This is bloomberg. Emily tencent reported secondquarter revenue that missed estimates, while they beat profit expectations. Online ad revenue grew a worse than expected 16 , this as they grapple with competition and an economic slowdown. For more, i spoke with bloombergs selina wang in beijing. Selena even though we spoke on expectations, the focus was really on the decline in growth along the online ad revenue. This is not the most important section, but this was a promising area and were really starting to see that hit by broader Macro Economic<\/a> issues, as well as the competition. What was interesting is where the company pointed out the slowdown, from the auto sector, the real estate sector, the financial sector, which really isnt a surprise given the stream of weak economic data. In terms of white dance, this is really the big elephant in the room. That company has been on a roll in terms of getting companies to buy into their ads and buying user eyeballs onto their platform. The company didnt engine that company by name but said they would be investing more in video apps, and would be beefing up its longform Quality Content<\/a> to try to differentiate itself from its competitors. Emily now, gaming has been a controversial part of the business in china. Of course, theyve cracked down and since eased up. But what did we learn about the gaming segment at tencent . Selina the worst is over, given that this is still the companys most important revenue line. We saw them monetize their important games, including peacemaker elite. For those who didnt know, this is the new, less violent version of the popular Battle Royale<\/a> game, but didnt get approval from chinese regulators. We did not see the full growth from game type monetization, but analysts are expecting it to pick it up later in the year. You mentioned censorship in the media space. They have to deal with government sensors, and those regulators havent been approving these game titles fast enough. We also heard from ceo pony ma theyll be focused on making less violent games, especially to teenagers. Those ad sales around Media Ad Sales<\/a> were hurt by censorship and the expectation is that as to what content can be shown. Emily meantime, wechat, of course, is the crown jewel of tencent, a super app to which there is no equivalent in the united states. How is wechat doing . Selina we rely on wechat for everything. Whether its communication, haircuts, you can do anything. Whats shocking is that this wechat app is reaching penetration but is still growing. It grew 7 to 1. 1 billion users in the most recent quarter. To try to continue to juice growth here, theyre trying to add more services and content into the app, and focusing on mini apps, which are essentially light apps within the app. Which encourages users to spend more time within we chat than other parts of the internet. Companies have responded positively to those, which can be used for everything from booking a car to ridehailing, as well as bike sharing. So, thats been a really successful area of growth there. Emily that was bloombergs selina wang. She was also tracking alibaba results out thursday. They defied china slowdown, sales beating top estimates. Selina and kevin carter discuss. Kevin the real story in china and the emerging markets is the billions of consumers that are moving on up and they want better stuff. Retail sales and consumption continues and in emerging markets, that consumption is going online onto a smartphone, just as it is here, but theres a leapfrogging because most of the infrastructure was never developed in china. Emily joe tsai talked about demographics and digitalization, which is driving the results, despite what was happening Macro Economic<\/a>ally and geopolitically, the question is, how long can that keep up . Selena joseph mentioned is reaching markets around the world. Lower tier cities are starting to pay off, you see rapid digitization of these lower tier cities, and they are able to go headtohead with companies that are focused on lower tier markets. And theyre planning to invest more in these areas and their market share is growing. This is a big trend in china that seems to be defying the broader slowdown. Theyre investing a lot in personalization, in targeting these consumers with better algorithms and investing in sales promotion. So, that altogether, is trying to help boost the china Commerce Business<\/a> by 40 , almost twice the amount of Online Retail<\/a> sales. Emily would this lead you to believe that ecommerce will not impacted by trade tensions in china . Kevin i think its probably the sector to be affected the least. Emily why . Kevin the tariffs and trade war is about agricultural products, manufactured goods. Its about the 500 Million People<\/a> in china who do not have a smartphone and as soon as they get that, they are going to connect with their friends, play games, shop. So, the secular trend of ecommerce is a one directional thing and its not really part of the trade war. Emily to that point, strong results said alibaba has increasing competition from not just j. D. , but endo duo. What are the headwinds that alibaba faces ahead . Selina alibaba has been pretty resilient amid increasing competition from the likes of jd. Com. But we did see some areas of challenges, the Cloud Computing<\/a> segment still has negative operating margins. We saw growth decelerate in that area. Theres also losses in the Digital Media<\/a> and entertainment sector there. Theyre facing increasing regulatory issues. Something we poitned out, alibaba isnt truly an Ecommerce Company<\/a> in the way that you would think of amazon, and while we saw tencents Online Advertising<\/a> really take a hit, alibabas business has maintained strength there. So they are doing things to keep their customers engaged and improve the advertising return on investment or customers. Emily so kevin, if the trade war drags on, and we dont know how long. What will the fallout be in china more broadly as an emerging market . Kevin well, i think its likely to impact the chinese economy. And is likely to impact the sectors that are the export and manufacturing sectors. I would like to think that the tariffs are not going into affect. Emily many tariffs are already in effect. Kevin this is true, in both directions. The ones that were pushed out, i would like to think this is a negotiating tactic. We had a trade skirmish with china 10 years ago and put a tariff on chinese tires. They put a tariff on our chicken feed. But that was a tariff put in under the Obama Administration<\/a> and it lived for three years. It saved 1200 American Tire<\/a> making jobs at a cost of 1 million per job, and it also cost three jobs in retail for every job it saved and the american taxpayerfunded that, so i would like to think the mathematics are clear enough we wouldnt do the things were threatening. The market is voting out that we will likely have a recession in our country, and i think it could be bad if we go ahead with the tariffs. Emily where does that mean youre placing your bets . Kevin emerging Internet Companies<\/a> are not really part of the trade war. This is about people all over the world consuming, wanting stuff, using their smartphones. Emily that was kevin carter and Bloomberg Technology<\/a> selina wang in beijing. Coming up, you know him as the former head of google china. Hes at the head of one of the most popular capital funds. An exclusive conversation with him next, as he eyes and ai ipo valued at more than 1 billion. This is bloomberg. Emily the former head of google china is turning heads at the helm of one of chinas most prominent funds. Since the founding, theyve invested in more than 300 companies, including one he hopes will be the fastest ai startup to hit 100 million in revenue. We spoke exclusively to selina wang. She asked about the longterm plan for capital raising. Kaifu we dont plan this ahead of time. Based on the trajectory of innovation, its, i think today, fair to say its fastest 200 million Revenue Company<\/a> in the world. Selina where are you now . Kaifu were not quite there, but by the time we project well get there, it will be the fastest to reach 100 million of revenue. A lot of unicorns are not even at 100 million revenue, i think it can get there pretty quickly, the revenue over 100 million onwards, towards 200 million. At that point, it should be well over a unicorn and can be listed publicly. Selina whats your timeline for an ipo . Kaifu 100 million to 200 million revenue and the price sales ratio of 10 or so. Which values the company at 1 billion to 2 billion. It wouldnt be far from now, less than two years. Selina you wrote that the area of technological discovery was over, and now its all about implementation. So, how do you see this business continuing to evolve . Kaifu were still at a very early stage in the commercialization. Were kind of at the equivalent of early internet portals back when everyone was using yahoo and there was not even a google or amazon or facebook. Theres a lot of room to reap rewards. Selina were seeing venture rewards. Selina were seeing venture deals fall dramatically. They fell 77 . Is this a longterm winter or a healthy, short term place to bring valuations back to healthy levels . Kaifu on the negative side, in an economy thats slowing down, everything slows down, including venture capital. What is happening is that everything slows down including levels . Venture capital. What will happen is there will be a shakeout. The top will continue to thrive. Many of the smaller first time vcs that have raised money and conventional ways will get in raising money using unconventional ways will get in trouble. So that is part of it. But the Positive Side<\/a> is if the economy is challenging, and the valuations are down, its a good chance for us to go shopping. Selina there are reports some chinese ai companies, like facebook plus, could be added to the blacklist and cut off from u. S. Technology. How do you see that playing out and does it have an impact on the ai industry . Kaifu so, i think the impact would be much less than say, a company like huawei, which has intricate Hardware Software<\/a> products built with multiple dependencies. Selina the u. S. Has been scrutinizing foreign deals in the u. S. , and many chinese funds have scaledback their investments. How does this strategy in the shortterm and in the longterm . Kaifu in the shortterm, it has no impact because u. S. Investment has always been less than 5 of our total, so now it goes from 5 to 2 . In the long term, i think it is a pity if we really have to cause a total separation of two countries because one could argue that Artificial Intelligence<\/a> got to where it got to because the whole world has been able to work together. Emily part of our exclusive interview with kaifu lee. And that does it for this edition of the best of Bloomberg Technology<\/a>. And we are livestreaming on twitter, as well. Find us at technology, and follow our global breaking news network tictoc on twitter. This is bloomberg. Nejra overhaul on the way. The volcker rule could be in for an eminent revamp. Looking beyond brexit with little time to extend the deadline. What will the new rules be . Goodbye to the buy side. Outsourcing could mean the death of inhouse trading. We will look into the logic. Welcome to Bloomberg Markets<\/a> rules and returns. I am nejra cehic in london. 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