Critics say it is not enough. And chasing tesla. New luxury car seeks to overrun tesla. We will run down the features, including the price. Slack chairs are plunging in after hours trading after the company gave its first earning report as a public company. While it beat analyst expectations for both secondquarter revenue and earnings, it projected slower sales growth for the second half of the year. Aboutsaid revenue will be 154 million in the third quarter, signaling that strong competition may dent the Software Makers rapid rise. Shares are falling about 15 in the postmarket, following the results that its poised for a record low. Joining me to discuss, nico and larry. Great to have you. Weve had a few hours now to digest the earnings. Give me some of the big concerns here. Is the big concern that Topline Revenue growth . Well, thats something i dont cover. I cover i work for technical professionals. I talk to the geek in the room, the i. T. Professionals about installing and securing the software. I can tell you, from my perspective, there is still strong interest for slack from our metrics. If you look at the inquiries we get and other metrics we get around our research reports. Taylor if you say there is Strong Demand here for slack, talk to me a little bit about the competition side, mainly from microsoft. Namely from microsoft. Larry its pretty stiff competition. Microsoft is trying to push Microsoft Teams and this type of collaboration into the infrastructure, and so it becomes this horizontal service that everyone in the company has access to. And we can tell you, based on our surveys in this past year, that office 365 is attributed early is increasingly being attributed to collaboration. Opinion, as microsoft it has built, awareness to collaborate more effectively in the cloud, which should help slack and increase interest in the market overall. Taylor i want to bring in nico grant, who has been covering slack for us. Give me your top takeaways. What happened to the top line Revenue Growth . So, taylor, this is an instance in which slacks best wasnt good enough. We had seen for years that slack hypede of the most unicorns in silicon valley. Hyped unicorns in silicon valley. It raised at least 1. 3 billion because of all that anticipation, and the stock went down 15 today. The stock went down about 20 after that first pop when it went public in june, and the reason why is because the company is decelerating. Whether we consider the revenue forecast for fiscal 2020, which was just short of the consensus estimate of wall street analysts, or if we consider the growth in the number of paid customers and large customers. Is for many metrics, slack not growing as quickly as it once did. There is the law of gravity when it comes to these pod application companies. The larger you get, the more difficult it is to continue growing at the same rate. Moneylosing company. From an investor perspective, if you are not making money, then you need to be growing. If you are not making money and you are not growing as quickly as we want you to, then we are a little bit concerned. Taylor you not only got the investor perspective, but you heard from the ceo. What did he have to say to defend the topline and bottomline growth . Ceo i just spoke with the and cfo. Butterfield said, basically, this is very strong growth for our business. The cfo echoed that sentiment. They said that when you consider the amount of customers who are spending more than 100,000 each year with slack, think of this as the largest businesses in the world, that number increased by 75 to 720, but thats still a slower pace of growth. Theyre very much looking forward to a current product that they have coming out right now, which they think can continue to improve things. But they are going to focus and tell investors on the earnings call, which has just started, about the customer stories, basically. Tell them what companies are using slack. Theyve seen lots of growth in europe, including germany. They are also seeing growth in the u. S. , they say. But essentially they are sticking to their line of, this is good enough, even as investors clearly are not happy right now. Taylor well, i want to bring larry back to this conversation. Larry talked about the future of slack, and part of that is bringing in some security tools. I wonder if that is a future growth area for them. How does that compare with others . Larry when you talk aboutslacks slack, you have to realize there are two different families of products. One is slack teams, which you may be familiar with. Thats the free version of slack. Theres a paid version where you buy it team by team or workspace by workspace. Then there is the slack enterprise grid. Thats the enterprise license product, where you get allyoucaneat, all you can consume teams and workspaces. Thats who i talk to our clients about most often. Thats where they are investing a lot into the Security Products as well. They recently released a new desktop client which handles more effectively a larger number of workspaces, so they are expecting some growth there. Theyre also building in some native mobile security features, very similarof to what intune does with microsoft, but to be able to control how the application behaves on the mobile device and control the content that slack uses on the device. Thats all good stuff to help them compete and help them build credibilitys with the i. T. Professionals that i talk with. Taylor like you said, all good stuff, certainly increasing competition. Thank you to nico grant and larry cannell. Bloomberg beta, an earlystage venture fund, is an adventure an investor in slack. To itsis adding a woman allmale board of directors while it prepares for an ipo. The Harvard Business professor was previously a Senior Vice President at uber. Wework says within a year of going public it will add another director with a commitment to increasing the boards gender and ethnic diversity. To could begin the roadshow for its ipo as early as next week. Up, 170 million is what google will have to pay as part of an agreement with the ftc for violating childrens privacy on youtube. This is bloomberg. Youtube. This is bloomberg. Taylor another fine for google. This time youtube has agreed to pay a record 170 million to settle claims that it violated childrens privacy laws. Most of the money will go to the federal trade commission. 34 million will go to new york state. Youtube has been accused of failing to obtain parental consent in collecting data on kids under 13. To discuss, im joined by the Vice President of netchoice, a tech lobbying group that counts google as a member. Also with us, ben brody, who had reported on this story. Let me start with ben. The fine doesnt seem like much. How big of a deal is this . Ben it is certainly easy for google to pay it. Its a drop in the bucket compared to their annual revenue. It is, however, a very large fine by the standards of childrens privacy. Its 30 times larger than the previous record, which came in february with tictoc. Issues on that popular teen video app. You have a lot of people saying this isnt really going to make a dent in googles Business Practices, but it is certainly setting a record for this particular space. Taylor youre taking the flip side of this. Give me your breakdown. What do you make of the fine and the ruling to limit some of the ads and commenting on childrens videos . Thanks for asking. Is 30 laid out, the fine times larger than any prior fine under this. What surprised me so much was that the fact that the ftc was even able to extract this fine, given the fact that the ftc has gone well beyond the statutory limits of what the law allows. Essentially, youtube is a general audience website. Every user on youtube says that they are over the age of 13. The terms of service say if you are under the age of 13, dont use youtube, you cant use youtube. So, theres really no there there for the ftc to bring this action. I think it sets a really dangerous precedent going forward, by suggesting that the general audience website is now going to be decided by the ftc to be a child directed website and subject to this law. I would say for anyone who operates a website talking about harry potter or the avengers or anything that could possibly be related to children, they need to be worried that the ftc may be coming for them next. Taylor carl, to be fair, weve gotten a lot of pushback from some of the members of congress. We have a tweet, of course, was senator ed markey, who saying that youtube knowingly broke federal law. They are tracking kids in order to rake in advertising dollars without permission from parents, but the ftc let google off the hook with a drop in the bucket fine, not a single google executive or investor will bat an eye. Carl, what do you make of that and frankly the reaction from senators . Carl senator markey should know very clearly what the law does and doesnt allow, since he helped write it when he was in congress back in 1998. Under the law, there are two ways you are subject to being under this. You are a childdirected website or you knowingly collect from people under the age of 13. Youtube did neither of these in this case. So, i think for a lot of people who are saying its not enough, i think for a lot of those individuals, it will never be enough. I think that, for them, whether or fine was 170 million 170 billion, it will never be enough for people who just fundamentally dislike these platforms and their right to give us free services. Taylor ben, what do you make of the end of that tweet that said not a google executive or investor will bat an eye . Whats the readthrough to other competitors . Ben the market certainly shrugged it off. Google was trending up a little bit all day. The youtube ceo did come out and outline some of the changes that they are making. This, aless welcomed little bit of a chastened tone. This was something they were ready to do after some consultation. I do think it is important whta c what carl is saying. Youtube was going to its advertising partners and saying, look at all this children you will be able to reach on our website. It does seem like there was some knowledge there that the ftc was able to demonstrate in its complaint. The question is, will they be able to demonstrate that in the example of an overthetop streaming service. Thats essentially the same thing, a company that provides a platform and then you have content creators who are able to appear on that. If one of those is the studio thats putting out harry potter, does the streaming service need to worry . Same thing with the connected device. Do they need to worry if some of s, butapps are kids app its generally a Smart Speaker that is general audience . Taylor i imagine you will keep us apprised of all the developments. Carl, ben, thank you for joining me. I want to stay with google here, because theres another story that caught our eye. The tech giant and its industry allies are making a bid to water down the first major data privacy law in the u. S. According to documents obtained by bloomberg, the companies are seeking to carve out exemptions for digital advertising. A lobbyist for google recently distributed new language to members of california state legislatures that would amend the California Consumer privacy act. As currently drafted, the law limits how google and other Companies Collect and make money from user data online. It is due to kick in in the next year and there are only a few more days left to amend the law. To discuss, im joined by our next guest. Thanks for joining me. Put simply, we know why they want to water down the law, frankly, because thats a big source of revenue. My next key question is, are so. This has been a debate thats been going on for years now, and its just now struck the California Legislature because of this first data privacy law in the United States going through their corridors. For the last couple of years, they have been insisting that there need to be exemptions for targeted advertising, in order for them to maintain this very lucrative business model. So far, their attempts earlier in the year to pass legislation to create an exemption was installed in the Senate Judiciary committee, and now this lastminute effort, they have yet to find a sponsor to push it through. That doesnt mean that this argument is over, even if it doesnt succeed in getting to an amendment phase and signed by the governor by the end of next week. Theres still the end of this year and the First Six Months of 2020. They could wrestle away some sort of exemption to legalize the targeted advertising. Taylor any specific exemptions or changes that really stood out to you . Theres a couple that are interesting. All of this relates back to how they aggregate your data. According to this ecpa the c cpa, much of it cannot include personally identifiable information. Google is looking for ways to collect data through your browsing habits that dont directly tieback to you as a person. One of those ways would be to collect data on a website where you visited, and then to analyze that under a pseudonym. What they would then be allowed to do is take that data and arhaps distribute it to competitor of that original website for them to use and monetize. Or just broadly speaking, they want to change very small sections of language, like, this Business Purpose is defined as, to instead say this Business Purpose is defined to include. That provides some leeway for Business Practices to include what they need them to include in the future, with less regulatory oversight. Taylor bloombergs kartikay m ehrotra, thank you for joining me. Coming up, apple begins to borrow. The iphone maker heads back to the bond market. We will look at why. Technology is livestreaming on twitter. This is bloomberg. Taylor what do you do when you have nearly 200 billion to sit just sitting around . If you are apple, you go back to the bond market. For the first time in nearly two years, the iphone maker is raising money via highgrade bonds. The offering is coming in five parts, the longest of which is a 30year security. To tell me more, we are joined by bloombergs molly smith. Frankly, why . They dont need the cash. Molly so dont a lot of other companies that have been in the bond market this week. One investor told me this perfectly. Kind of company you want to lend to is the company that doesnt need it. Thats why apple always does so well in the bond market, especially when they are coming to fund what is largely anticipated to be shareholder returns. Bond investors dont want to give money to shareholders, but apple is such a good company to invest in. They keep lending. Taylor if you come into my terminal here, one thing you will say is cash see is cash, more than 200 billion, and some of the debt outstanding. When we talk about use of cash, you mentioned shareholders. How much of this would be going to pay down debt or Fund Future Acquisitions . Molly they dont break out the terms for us. It is just general corporate purposes. It could be any of those three, capital expenditures, anything under the sun. It makes a lot of sense if you apple, wheny like you are looking at a 30year bond and what the interest savings will be compared to their outstanding 30year debt, it comes out to be more than 7 million saved annually in interest expense. Taylor i wonder, this is sort of a broader question, but it pertains to apple. Theyre high theyre highgrade. Weve heard some of the lowgrade companies are doing well. Your aa, aaa bond is frankly 0 . Flooding into the highgrade area. Is there still demand for a aa apple bond . Molly everywhere, yes. I think ive heard the books on this were up beyond 20 billion for what they were doing. This is very well subscribed. When you just look at the broader macro picture right now, and all that negative yielding debt thats in the world, nearly 17 trillion, apple bonds look great compared to that. Taylor we have it on the screen, the different trenches tranches. Any idea if an investor would be willing to go out 30 years, or is there a little bit more demand shorter in on that duration, given that we dont know where the fed is going from here . Molly we did see this price already, and it looks like there was a lot of demand skewed toward the longer side. Billion wason of 7 on the 30year side. Taylor they come to market they havent come to market in a few years. How do spreads compare now to the last time . Molly its about all in yields in this case, because treasuries have just rallied so much. While spreads have been fairly flat so far this year, when weve seen a rally in treasuries because of all those macro headlines with the trade tensions, with the fed expected to keep easing, thats made all in yields so much slower. Thats why weve seen issuance longer out the curve, where the 30euro has come down so much. The 30year has come down so much. Taylor we are looking at 30year option adjusted spread. You take out the options and this is basically what a 30year bond price has done. Apple, maybe just a lower rated a apple, maybe not as good as lowerrated peer. Molly i think that when you are looking at this on a spread basis, it can be a little harder to see the whole picture, just because so much of what we see so far this year in investment grade, its been really all about the treasuries rally. Thats why investmentgrade debt has been the best performing asset in fixed income this year. Returns of 14 last year, down 2. 5 . This is a massive turnaround, and treasuries are demand for that. Taylor thank you. Coming up, 2020 elections are around the corner and big tech is looking to ramp up its security. We take a look into the meeting at facebook headquarters with the fbi next. This is bloomberg. Is bloomberg. Devices are like doorways that could allow hackers into your home. And like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. In honor of my dad, who was alzheimers. I decided to make shirts for the walk with custom ink, and they just came out perfect. 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