First, our top story, google agreeing to buy fitbit for 2. 1 billion in cash. The fitness tracking Device Company jumped on the news. I am joined by garrett divina. What does fitbit know about hardware and software and health that google doesnt . Gerrit a good question. Google has been rumored about talking about a smartwatch. But the operating system has been a collapsed and is not as has been eclipsed by competitors. And is not as popular as android. What they are doing is saying lets buy fitbit and build our business from that. Taylor fitbit is seeing its third annual year of sales decline. Why is it an attractive choice . Gerrit its one of the few choices, im not sure attractiveness is what is going on. As you said, they have been in decline, they struggled as apple came out with the apple watch and can do things a lot of fitbit devices cannot. The price was a premium for fitbit that it is still cheaper than when it went public several years ago. It is a small amount of money for google and it can use the technology to add to its business and throw things against the wall. Taylor talk to me more about the ecosystem. We know they bought the intellectual property of fossil, also a watchmaker. How does this fitbit combination integrate the hardware with software . Gerrit i am curious how much googles wearable ls comes out, or if they scrap it completely. I think its likely google will come out with its own watch, a pixel watch, so to speak, and complete the ecosystem. It is trying to play into what apple is doing, apple has phones, watches, laptops, and google wants to do the same thing. Taylor i have to ask about the regulatory scrutiny. More house of representatives members coming out in particular, a rhode island representative saying this does raise red flags. What is the antitrust scrutiny . Gerrit google already under scrutiny from state attorneys general, the doj, house of representatives, individual senators who have an ax to grind against google, and a lot of the usual suspects have come out and said today, nothing in terms of particularly new investigations but they said really . You are under scrutiny and youre going to buy another company . Some are saying this is google thumbing its nose or regulators, saying we are still going to do this. From a traditional antitrust perspective, buying a watch company should not necessarily raise flags because google does not have a watch of its own, but it is buying a lot of data. Google is one of the biggest Data Companies in the world and that will probably be the tack investigators take when they look at the deal. Taylor another day in big tech and another use of cash. Thank you. 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 . Greg m a and ip market, its a and the ipo market, its a healthy environment. There are a lot of Great Companies still doing well, some with property, like fitbit and the google acquisition. As a lot of money, good companies, and exits are healthy right now. Taylor when you say there is a lot of money, are you seeing more cash, credit, equity . Greg the main two sources of capital, equity and debt. For the innovation economy, the dominant is equity. From Venture Capital, raising larger and larger funds, sovereign wealth funds, family 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. Taylor i have heard the term a 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. My view is that in some ways, valuations are heating 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 these companies that allows them to stay private larger, and it allows them to go after really big ideas. Those two things i would say help the innovation space. When you are making big bets like that, they dont always work out and sometimes when they dont work out, get a lot of headlines and a lot of us are talking about wework. But i do believe it helps put 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, peloton, datadog. 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 prospectus, s1, becoming profitable was so far out it was hard to comprehend. Thats different than it was historical. Usually you saw profitability in a short time. I think people are less focused are more focused on profitability now and that is healthy for the environment. 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 hacking group, being unleashed on how value targets. On high value targets. This is bloomberg. Taylor tiktok is one of the 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 . Tom 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. What is happening with tiktok, which is popular with a lot of young people, the concern is twofold. One is that it engages in 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 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. It doesnt show this isnt Just One Party or the other party. In our political sphere, where 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 your birdseye view that cfius is 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. 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. Apt41 is using malware to steal Text Messages targets according to a cybersecurity firm. To discuss in washington is John Holquist from fire eye. What did we learn about targeting specifically sms Text Messages . John we discovered a piece of 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 them to 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 a move toward more secure, encrypted applications, but it is important to remember that adversaries are going after them as well. Almost all messaging is under threat right now. Taylor underscoring all of this 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. John 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 of providers, nationstates 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 aggressive ways and they will be 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. Taylor apple ended years of anticipation about its next act in television on friday. They launched the apple tv streaming service, which will offer shows to match rivals. But it is liking what many is lacking what many consumers want, a big library of favorite movies and tv shows. To discuss, we are joined by our guests. Dan, how far behind is apple . Dan they are far behind from a content perspective. You have others spending 10 12 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. This is a company that given the golden install base you can never count out. Taylor dallas, your take on apples position, the strengths and weakness relative to its big competitors . Dallas they have two advantages two key advantages and challenge. 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 very aggressive at 4. 99 a 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. The third clear advantage is apple resources, a quarter trillion dollars, no studio has that to match. The other side, they have challenges, the content challenge is enormous. This is the weakest offering. None of the shows will be bingeable. 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 they 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 stepping up to 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. Weve talked about mgm, sony, lionsgate. It is a onetwo punch in terms of how they get there, they built a fortress and then they build the content. Taylor 4. 99, is that appropriate . It is cheaper than competitors. And your thoughts on integrating the free service if you buy a new device, to further draw people into the business . Dallas apple doesnt have to win the streaming more. It is do or die for netflix but this is about strengthening this part of apples business. I will not be surprised in the near future if we dont see apple news, apple arcade, the gaming service, apple music, and apple tv bundled in a content platform that becomes the defect a way in which we enter the streaming universe. The other thing to remember is that apple is a platform where you can build your own mini streaming bundles, so you can subscribe to hbo and showtime within your apple device. I think the 4. 99 is very aggressive, the cheapest in the market by far, but they need to be in that space given the lack of content in the first 12 months. Taylor thank you to dallas and dan. Coming up, it has been a week full of earnings, acquisitions, policy changes are political ads on social media. We go over the biggest tech stories in this weeks tech in review. That is next. This is bloomberg. Taylor now to our weekly roundup of the top stories in tech. The biggest toy of the day has story of the day has to be google buying fitbit. 2. 1 million in cash. It could increase scrutiny by antitrust regulators. Let me pull you in here. As an analyst, what are the antitrust scrutiny issues like for you . This beltway versus big tex versus big tech battle will be getting a close microscope. This is something investors will focus on. Taylor as you have been following the fundamentals and technical portion of this, but to the technical show us as far as how google is positioned . The stock has had this great move. It had been underperforming. It will be very bullish for the stock. Some of the regulatory and political headwinds that it faces, it could be tough. It could have very interesting implications. Taylor does this give them a fighting chance against the apple watch . That will be a massive uphill battle. Look at what apple has done. They have really cornered the market. They have done a phenomenal job with apple watch. This is an opportunity they needed. They saw where apple is going. They saw the fitbit asset. This is an opportunity. I think this is an offense of move and a defensive move at the same time. They continue to be at the top of the mountain. Taylor your thoughts on the general climate . Does this continue to mean we are buying instead of innovating . It seems to be that way. The problem is the big players have so much money. They can force people out of certain areas. We are starting to hear from some of the Venture Capitalists. Instead of saying they can build this product and we will take the Company Public someday, they say they are worried about that market. There are all sorts of implications. Big is not so good right now. Investors will be have to very be noble as they move forward. The election is almost one year away. Taylor as we talk about this and the regulatory environment, lets switch to the second big topic of the week, facebook. We learned that regulators are zoning in on their purchase of instagram. That will be a key area focus for the antitrust perspective. How is the stock pricing and in if instagram and facebook are broken up . It is funny because when you get to these situations where the political efforts fall into play, it is usually not that big a deal. This will only grow. You have a lot of people, you talk about the impeachment situation. A lot of gop people will start to say, how can i differentiate myself. I will go even harder on the facebooks of the world. We saw things