Critics say its not enough. Porschetesla, the we will run down the features, including the price. Now, stop shares are plunging in afterhours trading after the company gave its first Earnings Report as a public company. Expectations for secondquarter revenue and earnings. It projected slower sales growth for the second half of the year. It willabout signal strong competition to make the Software Maker a rapid riser. We do is poised for a record low. Isning me from to discuss our guest and on the phone is our other guest. Larry, great to have you. We have had a few hours to digest earnings. Give me some of the big concerns. Is the big concern the Topline Revenue growth . That is something i dont cover. I work for technical professionals. I talked to the geek in the room, the i. T. Professionals about installing security. 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 research reports. Taylor if you say that there are some Strong Demand for slack, talk to me about the competition side, mainly from microsoft. It is pretty stiff competition. What microsoft is trying to do is push Microsoft Teams and this type of collaboration into the infrastructure. It becomes this horizontal service that everyone in the company has access to. We can tell you based on our surveys this past year that office 365 is increasingly being attributed to collaboration. In previous years, it was more associated as an email outsourcing surface service. Withcrosoft has succeeded teams, it has also succeeded in building awareness of the need for collaboration and the ability to collaborate more effectively in the cloud, which should indirectly help slack and increase interest in the market overall. Taylor i want to bring in our other guests covering slack for us at bloomberg technology. What happened to Topline Revenue growth . This is an instance in which slacks vest was not good enough. We had seen for years that slack was one of the most hyped unicorns in silicon valley. It has raised 1. 3 billion because of that anticipation and the stock went down 15 . It went down after the first pop in june. The company is decelerating. The revenueonsider 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, but for many metrics, slack is not growing as quickly as it once did. Of course, there is a law of gravity when it comes to these hot applications companies. The larger that you get, the more difficult it is to continue growing at the same rate, but slack is a moneylosing company. From an investor perspective, if you arent making money, you need to be growing. If you werent making money and youre not growing as quickly as we want you to, then we are a little bit concerned. Taylor do not only got the investor perspective, but you got off the phone with the ceo. What did he have to say to defend growth . Nico i just spoke on the phone with the ceo of slack in the cofounder, as well as the cfo. Basically, said, this is very strong growth for our business. The cfo echo that sentiment. They said that when you consider the amount of customers who are spending more than 100,000 each year with slack, so think of this as the largest businesses in the world, that number increased by 75 to 720. That is still a slower pace of growth and they are looking forward to current product that they have coming out right now, which they think will continue to improve things, but they are going to focus and tell investors on the earnings call, which just started, about the customer stories, basically. Tell them what companies are using slack. Date of seen lots of growth in europe, including germany. They are also seeing growth in the u. S. , they say. Essentially, they are sticking to their line of this is good enough, even as investors clearly are not happy right now. Taylor i want to bring in larry back into the conversation, because larry talked about the future of slack and part of that is bringing in some security tools. Is that a future growth area for them . How does that can compare with others . Larry there are two different families of products. One is slack teams, which you may be familiar with. The free version of slack. There is a pay version of that or you buy that on a workspace by workspace basis. Then there is the slack enterprise grid, that is the enterprise license product, where you can get all you can consume teams and workspaces. That is why talk to our clients about most often. That is 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. They are building in native mobile security features to kind of very similar to what into it intuit does with microsoft to control how the application behaves on a mobile device and to control the content that slack uses on the device. That is all good stuff to help them compete and build credibility with the i. T. Professionals i talk with. Taylor like you said, all good stuff. Certainly increasing competition. Thank you to nico and larry. ,s a reminder, Bloomberg Beta earlystage venture fund backed by bloomberg lp, is an investor in slack. Wasard business professor previously the Senior Vice President at uber. Within a year of going public, wework that it will add another director with a commitment to increasing the gender and ethnic diversity. It could begin a roadshow for its ipo as early as asked week. Coming up, 170 million. That is what google will have to pay as part of an agreement with the ftc for violating childrens privacy on youtube. This is bloomberg. Taylor another fine for google. Pay 170lans to million, most of the money will go to the federal trade commission. 34 million will go to new york state. Youtube has been failing to obtain parental consent in collecting data on kids under 13. Theiscuss, im joined by Vice President of net choice. Brody, whos is ben has reported on the story. Levy start with you. The fine does not seem like much. How big of a deal is this . Ben it is certainly easy for google to pay. It is a drop in the bucket compared to their annual revenue. It is a very large fine by the standards of children privacy, 30 times larger than the previous record, which came in february with tiktok, similar issue, collecting email addresses and names without parental consent on the popular teen video out. Video app. You have people who say this is not going to make a dent in the Google Business practices, but it is setting a record for the base. Taylor give me a break down, carl. 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 times larger than any prior fine. What surprised me so much was the fact that the ftc was evil even able to extract this fine, given the fact that they have gone well beyond the statutory limits of what the law allows. Youtube is a general lottery ands 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 you to, you cant use you to. There is really no there there for the ftc to bring the action. I think it sets a dangerous precedent Going Forward by suggesting that a general audience website is going to be decided by the ftc to be a child directed website and subject to the law. I would say for anyone who operates a website talking about harry potter or the avengers or anything related to children could be worried that the ftc may be coming for the next. Taylor to be fair, weve gotten a lot of pushback from members of congress. We have a tweet from a senator and i will read it to you. Senator ed markey saying that youtube knowingly broke federal laws, tracking kids 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 batter and i. What bat an eye. What you make of that and the reaction from senators frankly . Carl senator markey should know what the law does and does not allow, since he helped write it back in 1998. Under the law there are two ways you are subject to being under it. You are a child directed website or you knowingly collect from people under the age of 13. Youtube did neither of these in this case. I think for a lot of people who are saying it is not enough, i think for a lot of those individuals it will never be enough. Whether the fine was 170 million or 170 billion, it will never be enough for a lot of people who 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 willbat an eye . Wereoogle executives they happy about it and what is the read through two other competitors . Ben the market certainly shrugged it off. Google was trending up a little bit all day. Out andube ceo did come outlined some of the changes they are making. This,re or less welcomed a little bit of a chastened tone. More or less was saying this was something they were ready to do after some consultation. I do think it is important what carl is saying. Youtube was going to its advertising partners and saying, look at all these children you will be able to reach on our website, so it does seem like there was some knowledge that the ftc was able to demonstrate in its complaint, but the question is, will they be able to demonstrate that in the example of an overthetop streaming service . It is 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 putting out harry potter, does the streaming service need to worry . Same thing with a connected device, they need to worry if some of those apps are kids apps, but it is generally a Smart Speaker that is general audience . Taylor i imagine we will find out and you will keep us apprised of the developments. Carl, and ben, thank you for joining me. I want to stay with google because there is another story that caught our eye. The tech giant and its allies are making a late bid to water down the first major data privacy law in the u. S. According to documents attained by bloomberg, they are seeking to carve out exemptions for digital advertising. A lobbyist for google recently distributed new language to members of California State Legislature that would amend the California Consumer privacy act. As currently drafted, the law limits of 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 correspondent. Thank you for joining me. Put simply, we know why they want to water down the law, frankly, because that is a big source of revenue. My next key question is are they successful . So far, no. This is that a debate going on for years now and it has just now struck the California Legislature because of this first data privacy law in the united thinks going through. For the last couple of years, they have been in testing insisting that the need to be exemptions for target advertising in order for them to maintain this very lucrative business model. Attempts to pass legislation to create an exemption was stalled in a Senate Judiciary committee and in this lastminute effort, they have yet to find a sponsor to push it through. It does not mean the argument is over, even if it doesnt exceed succeed in getting to an amendment phase and signed by the governor by the end of next week, there is still the end of this year and the First Six Months of 2020, when they could wrestle away some sort of to legalize the target advertising. Taylor any specific exemptions or changes that really struck out at you . There there are a couple that are interesting. All of this relates back to how they aggregate your data. Much of it according to the cc pa cannot include personally identifiable information. Google is looking for ways to collect data through your browsing habits that dont directly tie back 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 and what they would then be led to do is take that data and perhaps distributed to a competitor of that original website for them to use and monetize. Or more broadly speaking, they want to change small sections of language like this business purposes defined as to instead say it 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 thank you for joining me. Coming up, apple begins to borrow with billions and billions of dollars squirreled away. The iphone maker heads back to the bond market. That is next. Bloomberg technology is Live Streaming on twitter. Check us out and be sure to follow our global breaking news network on twitter. This is bloomberg. Taylor what do you do when you have nearly 200 billion sitting around . You go back to the bond market. For the first time in nearly two years, apple is raising money via highgrade bonds. The offering is coming in five parts, the longest of which is a 30your security. Its only more, we are joined more by molly smith, who covers Corporate Bonds for us. Why . They dont need the cash. They dont, but so do a lot of other companies that have been in the bond market this week. One investor told me, the kind of company want to lend to lend to is the kind of company that does not need it. That is why apple does so well when they come to fond Fund Shareholder returns. In apples case, they are such a good company to invest in and they have great cash management, that they keep renting. Taylor one thing you will say on the bloomberg terminal, you will see cash again, with a 200 billion, and some of the debt outstanding. When you 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 could be any of those three. It could be capital expenditures, anything under the sun of what they said. ,f you are a company like apple when you are looking at the 30year bond, compared to their outstanding debt, it comes out to be more than 7 million saved annually in interest expense. This is awonder broader question, but it pertains to apple. They are highgrade. We hear some of the lower Grade Companies have been doing really well because you cant get anything as an investor, your aa, aaa bond is frankly 0 . You have seen a lot of money flood into that highgrade area. Is there still demand for a aa apple bond . Molly everywhere. Yes. I think i heard the books on this were up beyond 20 billion for what they were doing. This is very well subscribed. If you look at the broader macro picture right now and the negative yielding debt in the world what is the number . Nearly 17 trillion. Apple bonds coming in around 3 for 30 years look great compared to that. Taylor we have on the screen the different trenches. 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 frankly we dont really know where the fed is going from here or what that means for different maturities . Molly we did see this price already and it did look like there was a lot of demand skewed toward the longer side. 1. 5 billion was in the 30your part, so plenty of people going well out the curve. Taylor how does that compare to previous years . How to spreads now compared to the last time to came to market. Molly it is not so much about spreads as it is about yields in this case, because treasuries have rallied so much. Spreads have been fairly flat so far this year. But we see the red rally in treasuries with the trade tensions and the fed expected to keep easing, that is why we have seen so much issuance at the longer end of the curve. Taylor we talk about the 30year. I want to bring up another chart on g tv. T is an optionremoved spread this is basically where the 30 year yield, the 30 year bond price is done. Apple not rallying as much. Maybe rated like a qualcomm. What do you make of this . And these highGrade Companies that have done well, but maybe not as well . Molly when you are looking at this on the spread basis, it can be a little harder to see the whole picture because so much of what we have seen so far this year in Investment Grade has been really all about the treasury rally. That is why Investment Grade debt has been the bestperforming asset in fixed income this year. Returns a 14 . Last year, we were down 2 . This is a massive turnaround. Taylor great time for apple to come to market. Thanks, molly. Coming up, 2020 elections are around the corner. Big tech is looking to ramp up security. We take a look at a meeting with the fbi next. This 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. This is bloomberg technology, im taylor riggs. Trade were between the u. S. And china has finally hit apple. President trumps china tariffs were entered into the federal register on friday, dragging the largest u. S. Technology company into the fray. Some are saying investors are looking to software as opposed to hardware due to the trade war. Bic president says tariffs are having less impacts on i. T. Spending than was originally projected. I spoke to him earlier. Compared to the headlines versus what has been happening, tech spending has not actually been not significantly affected as a function of a lot o