Launches. Tv googleour top story, agreeing to buy fitbit for 2. 1 billion in cash. Taylor San Francisco blockchain the fitness tracking Device Company jumped on the news. Will week is wrapping up. Divina. Ned by garrett there is still a lot of skepticism around the world what does fitbit know about about blockchain and cryptocurrencies. Here to break it all down and hardware and software and health that google doesnt . Tell us all about it is the garrett a good question. Firms head of research. Google has been rumored about yourt to talk about what talking about a smartwatch. Firm is. On your website you have it very clear picture of solving the scaling issues of going and the but the operating system has been a collapsed and is not as Security Issues is that how you popular as android. What they are doing is saying lets buy fitbit and double our business from that and build our business from that. Fitbit is seeing its third annual year of sales decline. Why is it an attractive choice . Fewit its one of the are standing out . We like to position ourselves as the next generation of smart contact platforms. We like to position ourselves as the next generation of smart contact platforms. That is a platform to create an application on top of a blockchain and have it run in a decentralized way. Even if your central server somewhere is taken down, your choices, im not sure attractiveness is what is going on. Application will not be taken as you said, they have been in decline, they struggled as apple down. Came out with the apple watch and can do things a lot of fit a network should be point fitbit devices cannot. Decentralized and owned and run by its users. This idea of having a the price was a premium for decentralized blockchain fitbit that it is still cheaper an idea of came from than when it went public several years ago. It is a small amount of money building applications and smart contracts. For google and it can use the technology to add to its seriousome significant business and throw things against the wall. Taylor talk to me more about security holes. The ecosystem. When our team was at j. P. We know they bought the morgan, we did a bunch of research in all of the different intellectual property of fossil, also a watchmaker. Blockchains that are out there. Combinations fitbit we decided we could do a good job making our own. Integrate the hardware with software . Gerrit i am curious how much that had the innovation that was ls comes out,le ls originally brought. Taylor i want to get the news of the day. You have a partnership launching on tuesday. What can you expect . We are doing a token sale on the coin list platform. Or if they scrub it scrap it completely. I think its likely google will it goes live tuesday, november 5 come out with its own watch, a pixel watch, so to speak, and at noon pacific time. Complete the ecosystem. It is trying to play into what apple is doing, apple has phones, watches, laptops, and it is very exciting. We are still in that phase where google wants to do the same thing. Taylor i have to ask about the nobody is sure of the correct regulatory scrutiny. Way to go from a blockchain more house of representatives members coming out in particular starting at zero to be a true decentralized network. Get tokens into , a rhode island representative saying this does raise red flags. Many people around the world. They can interact with people what is the antitrust scrutiny . Gerrit google already under around the world. We are doing a sale through coin list. Scrutiny from state attorneys libra changeds general, the doj, house of representatives, individual senators who have an ax to grind the regulatory scrutiny around google, and a lot of the all of this . It is brought more energy it waspull thought usual suspects have come out and said today, nothing in terms of particularly new investigations friends. But they said really . You are under scrutiny and youre going to buy another it has been great for us. Country another company . Started thinking critically about, if facebook are saying this is google thinks this is real, maybe it is not just some made up french thumbing its nose or regulators, saying we are still going to do this. Technology. Maybe this actually has from a traditional antitrust potential. In the corner of perspective, buying a watch company should not necessarily raise flags because google does thinking blockchain is usable not have a watch of its own, but for business and people to actually create resilient it is buying a lot of data. The goal is one of the biggest applications and transmit data Data Companies in the world and in a secure way. That will probably be the tack you can track supply chains, investigators take when they look at the deal. Taylor another day in big tech interactions between companies. And another use of cash. We are working on a partnership with a company doing medical thank you. Device tracking. With more on the atmosphere the Google Fitbit deal finds itself in, i want to bring in greg becker from Silicon Valley bank. I know you cant comment specifically on the deal, but generally, what is the m a environment like . Facebook entering the arena has and ip market, its a really increased regulatory scrutiny. Taylor who is on our heels . As a china . China . It i wouldve said they are not healthy environment. There are a lot of Great Companies still doing well, some a big player. But the president of china last week said that he believes with property, like fitbit and Blockchain Innovation is important. The google acquisition. Maybe we might actually see as a lot of money, good china being more open to companies, and exits are healthy cryptocurrency in a way that right now. They were not before. Taylor when you say there is a the United States really gets to lot of money, are you seeing need their ducks in a row. Taylor thank you so much for more cash, credit, equity . Two sources of joining us. That does it for this edition of technology. Capital, equity and debt. For the innovation economy, the be sure to volatile follow dominant is equity. From Venture Capital, raising tictoc on twitter. This is bloomberg. Larger and larger funds, sovereign wealth funds, family the game doesnt end after that insane buzzer beater. Offices. If you think about it, where Interest Rates are right now, there arent that many places in the world for growth, and innovation is a place for growth. Obviously money goes where growth is, and you see a lot of equity going into this space. I think it will stay that way quite a while. I dont see that slowing down. It might be bumpy that it will be fine. On the debt side, thats a place where companies can raise cash to support their business, thats what we do. It is important to us. It is a very competitive market and there is lots of money out there in the space as well. We have grown dramatically and part of it is to put money into the innovation economy. It is really debt and equity and both are healthy. Term a i have heard the lot of cash being used a lot. We hear that, there is a lot of cash chasing too few investments. What is that doing to valuations . Greg lets take a step back. You look at how much Venture Capital is flowing into the system this year, through three quarters, about 97 billion. It will be the second year in a row that it is or than 100 billion invested. In comparison to history, six years ago, that is a big jump. But it was back in 2000, it was only 100 billion. From the standpoint of almost 20 years ago, its about the same amount of cash. When you think about it, the market is so much bigger than it was back then for all of the obvious reasons. Companies are staying private longer, so for my standpoint, it is a lot of money, but when you put it in context of historical and you look at the 100 billion relative to the Global Capital markets, its not that much money. Ways,w is that in some valuations are heating up, but up, but it depends what sector you are in and what stage. Taylor has softbank structurally change your world . Greg it hasnt had a big impact on our world. If you think about the innovation space. What softbank has done is the following, they are putting large amounts of money into because with Nba League Pass on xfinity you can watch the out of market games you want these companies that allows them to stay private larger, and it all season long. Allows them to go after really and with the allnew xfinity sports zone, you get everything nba all in one place big ideas. Those two things i would say even notifications about your favorite teams. Watch the dropped dimes, help the innovation space. When you are making big bets monster blocks, and showstopping dunks. Like that, they dont always plus get instant access to your teams work out and sometimes when they dont work out, get a lot of with the power of your voice. Thats simple, easy, awesome. Headlines and a lot of us are talking about wework. Say Nba League Pass into your voice remote to upgrade for a great low price but i do believe it helps put or go online today. More money into the economy, more money into the innovation space, and from that standpoint, it is ok. Taylor you have a lot of clients, i will bring up some of the specifics, palatine, data peloton, data dog. Greg over the early part of the year and even the prior year, it was all about growth. Dont worry about profitability, focus on growth, and a lot of s1, becominga profitable was so far out it was hard to comprehend viewed thats different than it was comprehend. Thats different than it was david historical. David in the last recession, your firm performed very well. Usually you saw profitability in a short time. In 2007, it was pretty easy to calculate. Are less focusede when i go through those calculations, it is not the same. It would not be said to be an easy place to work. People love it or hate it. David in high school where you on profitability now and that is healthy for the environment. Interested in academics . Taylor more focused on profitability and more healthy for the environment, that is my take away. Thank you, greg becker. Coming up, the unstoppable hack that appears to be one chinese unleashedoup, being on how value targets. That is coming up. This is bloomberg. Up. This is bloomberg. Of the tiktok is one most popular music video apps in the world and it is being investigated as a National Security threat in the u. S. It was formally known as musicly and was bought two years ago for almost 1 billion. The committee on Foreign Investment in the u. S. Is reviewing the apps growing popularity amidst increasing concerns about its growing influence in the u. S. To us more is our editor for technology, tom giles. Why now . They are taking a close look at a lot of things, even things that happened in the past. There was the acquisition of grinder, the dating app. Now that has to be divested. The concern is chinese ownership of Something Like that could represent a National Security threat. Ok,t is happening with tikt which is popular with a lot of young people, the concern is twofold. Engages in it censorship that is against american values. Two, what is it doing in terms of gathering data . It could be accessible to the chinese as a result. Taylor like you said, a bipartisan issue. You had a republican and a you had a republican and a democrat coming out and saying this should be reviewed. Does that help or hurt the case that this is a bipartisan issue . Tom look, that probably has helped raise the level of urgency around it. This isnt Just One Party or the other party. Sphere, whereal things are so partisan, it is interesting that there are some things that everybody can rally around and one of them is fear of china. Taylor does this confirm from us isbirdseye view that cfi more involved in these technology deals across the border . Tom it is taking a deeper look at these deals, even deals that have happened years ago. Smaller sized deals. Scrutiny of anything that has to do with china. Chinese investment in the u. S. Chinese wants to buy a u. S. Company, take an ownership stake or even Minority Stake in a u. S. In a u. S. Company, it is all getting reviewed much more intensely. This is in light of the trade war. Taylor thank you for joining us. Sticking with china and National Security, chinese hackers are said to be targeting highranking military and government officials. A pt 41 is using malware to steal Text Messages targets according to a cybersecurity firm. To discuss in washington is john eye. Ist from fire what did we learn about targeting specifically sms Text Messages . A piece ofscovered malware designed to essentially look at sms traffic on a telecommunications provider. It allowed the chinese hackers to search by phone numbers and other distinguishing characteristics belonging to users, but it has also allowed trawl for specific keywords, intelligence and military terms, as well as related to groups politically at odds with the regime. Taylor john, is text messaging the new threat . We still often talk about email. Why text messaging . John text messaging is used in a variety of applications. Some people are certainly making more secure, encrypted applications, but it is important to remember that adversaries are going after them as well. Is underl messaging threat right now. Thisr underscoring all of is the concerns about huawei. Considering it has been on this list. Does this underscore that fears were correct about huawei . John i cant speak to any specific company but i can say that china is acting on a global scale to subvert telecommunications. Taylor john, what have you learned about increasing hacking in 2019 . How has it changed . Specifically from china. China has strayed from a lot of the intellectual property theft we saw so much of before. They are refocusing on traditional, classic espionage targets, including dissident groups for them as well as military intelligence targets. One of the important things to know is that they are maturing and moving toward things like, places like telecommunications providers. They are moving upstream where they can gain access to a lot of people simultaneously. Taylor and some of the concerns about this sms messaging is that there is nothing that me as a user can do to protect myself, right . John thats right. This takes place on the telecommunication Provider Network and not your phone. Its very hard for you to actually take some action to protect yourself here. You might look into an encrypted service or in the worst case scenario, you have to watch what you communicate. Taylor do you have any sense of how effective it is . I hear that communication providers, it is the most secure method, you get off of wifi and rely on your provider. Is there any evidence these arent as secure as we thought . John there has been some recent incidents where we know nation state actors are looking to gain access to those providers. As more and more people use single providers, or a handful willoviders, nationstates be interested in targeting them specifically. Will be interested in targeting them specifically. They will put a lot of resources there. They make a great effort to keep your communication secure and they may be more secure than usual, but there should be no mistake that these adversaries are looking to breakin. Taylor finally, any sense as we head toward the election, is it china or russia, who are you most worried about . John i am most concerned about russian actors. They are still very aggressive. The news came out very recently that they are again targeting the olympics in response to some of their troubles as far as being accepted into the games. I think that is a sign that they have not given up their will beve ways and they equally willing to interfere in 2020. Taylor thank you for joining. Coming up, the wait is over. Apple has debuted its original content. We will talk about apple tv next. This is bloomberg. Years ofpple ended anticipation about its next act in television on friday. They launched the apple tv streaming service, which will service, which will offer shows to match rivals. But it is liking what many consumers want, a big library of favorite movies and tv shows. To discuss, we are joined by our guests. Apple . W far behind is dan they are far behind from a contact content perspective. 10 12e others spending billion. But it is an iconic brand with an unparalleled install base. So they are behind but they are also diving into the deep end of the pool. That given theny golden install base you can never count out. Onlor dallas, your take apples position, the strengths and weakness relative to its big competitors . Dallas they have two advantages key challenge. I think the biggest key challen. I think the biggest advantage is distribution. Apples position to be the number one mobile streaming platform in the nottoodistant future, which is huge, because mobile is the accelerant driving the growth and streaming. The second is a, apple has been at 4. 99 assive month, and it is free for any apple subscriber in the next 12 months. That is critical because many adults do not stream and this is enabling them to dip their toes and for free and try content and hope they love it. Advantage isar apple resources, a quarter trillion dollars, no studio has that to match. The other side, they have challenges, the content challenge is a norm us. His is the is enormous this is the weakest offering. None of the shows will be eable. Le, be bing hopefully they can correct quickly. The second challenges competition. We will see a lot of streaming interests entering the market, including disney in the next two months. Twice as many consumers are interested in disney compared to apple. So there are headwinds but also some tailwinds. Taylor dan, i want to talk about content for pricing. With content and 100 billion of cash on the balance sheet, do bid for old content, our old favorite shows, or use the cash on developing original content . Dan i think it will be a multipronged strategy. The first thing is, they are about 6 billion a year, to build out the content. That will be more of a longterm initiative. I think they will start bidding on some of the content out there, but the issues with friends and others, it is an expensive proposition, but we believe it is a drum roll to them making a large acquisition of a studio in 2020. Sony,talked about mgm, lionsgate. It is a onetwo punch in terms of how they get there,