Transcripts For BLOOMBERG Bloomberg Technology 20240713 : vi

The tv industry suffers its steepest drop in ad sales since 2009. What that means for streaming. First, our top story, the challenge to tmobiles sprint merger took shape in a courtroom on monday. The combination of 13 states and the district of columbia suing to stop the deal. With the latest, jennifer was in the courtroom. Day one, what is your big take away . Jennifer it started with a surprise because the judge said, we are not going to have opening statements. I read enough in the pretrial memoranda, lets go straight to the witnesses. That was a big surprise, particularly for the lawyers who spent a lot of time preparing those. The judge is really intent on getting this done in two weeks. This was part of that, getting things moving quickly. We got right into the first witness, basically got through 2. 5 for the day. Overall, the witnesses were pretty good. They were better than i thought they would be for the companies. There were some bad documents introduced with the first witness. It is only two witnesses and the start of the third, generally, i thought the day was pretty good for the companies. Taylor we got a headline that sprints chief marketing officer said in a text message in 2017 that he thought this merger would raise prices by about five dollars on average for a subscriber. Is it too early to tell if that helps or hurts . Jennifer i think that was the worst of the day for the companies in terms of this deal. Theres those were bad documents. He did suggest to other executives at sprint that may be what they could use as part of their negotiating package with tmobile to get a better price was that the deal would mean an increase of five dollars on average per subscriber and that tmobile was not taking that into account when they were of value waiting whether when they were evaluating what they would pay for sprint. He did do a decent job of trying to play this down. It is a damaging document in terms of the companys case. He said, this is just a hypothetical. I didnt do any real studies. I was just guessing. I am a marketing guy and this is the way that marketers think. He did not really think that was something that was used as part of the negotiation. I would say that was probably the most damaging part of the trial today for the company. Taylor bloombergs jennifer rie, thank you for joining us. With more on the case and what is at stake for the industry, a law professor at nyu in new york. First, are you surprised this is going to trial . Well, no, given the way the case is set up. In general, this is a very unusual case to go to trial by the state and not the federal government. Taylor i was reading one of your documents on this case and you were writing about the judge treats the Justice Departments proposed final judgment. Why is that critical . Harry states will have to prove that this merger actually will or might lessen competition, particularly by raising price. The testimony referred to earlier is a critical aspect. The second is that the Justice Department, in a separate filing has agreed that this merger will raise prices by billions of but it has come up with a dollars, remedy. If the remedy is sufficient to reduce the competitive effect or make it not anticompetitive, that could be and presumably will be a Strong Defense by the parties. But, the plaintiff states will certainly argue that even if that remedy goes into effect, that is not enough to reduce the anticompetitive effect, going from a market with four major competitors to three. Taylor are they able to say that given the merger goes through, they are still only number two . Verizon as tell ahead of them. Does that help them . Harry not a bit. There is less competition. The fact that there is some competition, you might say, that is nice. The antitrust laws dont say we wait until we get a monopoly and stop. Congress said we stop before then. We want to stop archers that will lessen competition, not necessarily create a monopoly but will hurt competition. What, there is someone bigger than we are in the market. There is still some competition left. Taylor i want to look at a chart that i am showing to my audience. What we are showing is basically, since the proposed merger was announced, tmobile shares are off to highs and sprint shares have reacted poorly. They are now negative going back on a one year basis. This is leading a lot of analysts to speculate that we could see a settlement, given that the states have a relatively good case. Would you look for a settlement . What would a potential settlement look like . Harry that is always the problem in these cases, figuring out a settlement. A settlement is supposed to restore competition. If there were a settlement like that available, maybe the Justice Department would have proposed it and the parties would have agreed to it. This goes back to what we talked about earlier, that the settlement that was taken, from a states point of view, is inadequate. Frankly, given the arguments about why this reduces competition, it is hard to see what a settlement would look like. I expect the states to litigate this to the end. You can always be surprised. I think what the states are saying is just say no. , this merger is anticompetitive and cant be cured. We cant create another sprint. We have one. Lets have it compete. Taylor does this case have broader implications for trumps antitrust policy . Harry i think in some ways this is a test of how the Trump Administration is proceeding with antitrust policy. This administration has taken an aggressive position with regard any other Placement Agency any other Enforcement Agency having some different views of the Justice Department. There have always been differences among the various forces among the state and federal government. This Justice Department has been particularly vigorous in intervening in cases in which other enforcers have different views. It is not just the states. That is why i say this unusual this case is unusual to have the states litigating while the Justice Department is settling. The Justice Department has intervened with the federal trade commission in a case about qualcomm. It has intervened in private cases. It has been very aggressive in this way, wanting to control antitrust should look like. In general, we have the states in some ways going one way, particularly new york and california and the federal , government going another way. Taylor thank you to harry first, he has a low professor at nyu. At nyu. A law professor coming up, xerox tries to sell its plan for Hewlett Packard to hp shareholders. We will have the details next. This is bloomberg. Taylor xerox dangling carrots in front of hp shareholders. Xerox says the tie up could create as much as one and that have billion dollars in potential Revenue Growth. Do the math for me. Combine two companies how are you getting 1. 5 billion of future Revenue Growth . Xerox is saying in its presentation to hp investors that, on a pro forma basis, the combined revenue would be about 66. 8 billion, with hp contributing 58 billion of that total. They are also saying that there are certain products of hp that can be sold through xerox and certain efficiencies that could be made, and they could unlock 1. 5 billion of additional revenue. The problem is, with a company that large when you are already at almost 70 billion, is 1. 5 billion enough to convince those skeptical of a deal . And it also did not answer the question of whether revenue increases over the midterm or longterm would be possible in a declining industry. Taylor Revenue Growth, synergy sounds great. Is it realistic . Nico xerox would say yes, it is realistic. They have been crunching the math, and they have found the found that right now, hp is selling a lot of its computers and printers through either direct sales to large customers or through indirect channels, which means basically resellers. Xerox has a whole team of folks who sell to small and midsize businesses. They are saying, we can sell your pcs to our existing customers. We can have your products sold through as a service or subscription offering, and we can also have manufacturing efficiencies, supply chain efficiencies. Basically fire a lot of people. ,we can also reduce the number of vendors and suppliers we have. They are really making an argument that it is rational. Right now, the question is, will it be enough for hp shareholders to convince the company or force the company to do something . Taylor some of these are companyspecific issues. A lot of this is a structural change in the market where they are seeing declining in the printing business. Are they prepared to take on the structural change that is underway . Nico xerox has been sort of managing declines for a long time. Hp has two a certain extent. These are both businesses that know markets are shrinking. Hp got into a lot of trouble this year with investors because ink supplies started to fall and contract. The problem, some would say, in this deal, is that this would make a combined entity more subject to the whims of the printing industry, which is contracting much more than the pc industry. Hp gets most of its revenue from pcs. I think what you would see is that, if the entities combined, revenue would shrink at some point. But xerox is arguing that it is better to take control in this type of situation because the first movers that consolidate will have more power than the other Companies Left over. Taylor thank you to bloombergs nico grant. Now to the continuing saga of wework. Goldman sachs is playing their part in keeping the Embattled Company afloat. It is the first step in a pledge to put together a 5 billion for wework as part of the bailout. According to sources, softbank will be listed as the borrower and wework will be the coborrower. Jillian, who has been covering the story. What is 1. 8 in the scheme of the saga of wework . Jillian it will be meaningful to wework, a company that lost 1. 3 billion in the third quarter. If you think of credit financing, it is definitely a line that wework needs. It is in letters of credit. The company is going to receive 3. 3 billion in additional secured and unsecured notes. That is the second stage, the financing. Taylor what are they hoping to do with a new line of credit . Gillian they look to continue expanding in 12 key markets , which include new york and london, and they will continue to take on leases. In other cities, it is clear they will turn to a Management Agreement type structure, which reduces lease liability. Right now, they need the cash to meet their ongoing burden. Taylor i went to take a look at a chart i am showing inside my terminal actually shows in improving picture. In turquoise, the bonds of we work maturing in 2025. Yielding 12. 8 or so. Are investors pleased with the small turnaround, tweaks, and changes we have been seeing from the company . Gillian yes. Today, the story that goldman is involved in the new financing sent the bond up four cents on the dollar, i think. More than 4 . Of creeping out of distressed level a little bit. Bondholders are feeling a little more comfortable that the company is salvageable. The 9. 5 billion rescue package is coming together. So far, softbank has had a 1. 5 billion equity injection. It is also starting a 3 billiondollar tender of her. Tender offer. When that is done, softbanks stake in wework will rise to about 80 . The credit financing of 1. 75 billion, that will shore up the company for the near future. Taylor does this give you any indication that softbank is looking to share the burden . Gillian it is not so much sharing the burden, it is putting its name behind the company that it will be the major owner of. By signing on as the borrower and having wework as the coborrower, it takes some of the risks that credit providers, banks, lenders might have some hesitant in terms of lending on its own. Softbank stepping up behind them saying, we are here, we are the fallback. Taylor it is notable to me that it was Goldman Sachs coming through with a potential line of credit. A few months ago when we were looking at bailout options, it was also looking at a deal with jp morgan. Any thoughts of why goldman versus jp morgan . Jillian that is a very good observation. Adam is out now. That is why we read jp morgan is that front and center. Taylor bloombergs gillian tan, thank you. Speaking of wework, founder and former ceo adam neumann is looking to sell some new york residences. He is looking to sell two units that he combined into one. He paid nearly 28 Million Dollars for those apartments. Coming up, jedi mind tricks. Amazon says that a prized government contract that microsoft won is because jeff bezos is viewed as Donald Trumps enemy. More on all of that next. Bloomberg technology is streaming live on twitter. Check us out technology and follow our Global News Network at quick take on twitter. This is bloomberg. Taylor a special provision was investors tolowing sell shares. The remaining locked up shares are eligible to be sold next march. Back to a story i was following apple is returning to the annual , ces tech conference for the first time in decades. This time with Consumer Privacy on the agenda. The companys director of privacy will take the stage with facebook and a commissioner from the ftc. They will discuss regulation, consumer demand, and how companies build privacy at scale. Apple has not attended ces in an official capacity since 1992. Amazons fight over microsofts jedi win continues. The ecommerce giant claims the pentagon failed to fairly judge its contract bid because jeff bezosrump views is a political enemy. Amazon web services seeks to reopen the 10 billion cloud deal in the lawsuit. Joining us to discuss, bloombergs naomi nix in washington, d. C. What do we know about the he said, she said . Naomi amazon is contending that not only did the pentagon err in evaluating the bid, but those errors were made because President Trump meddled. They said, look it is not clear , how much the pentagon took trumps comments into consideration when they gave the award to microsoft, but it is definitely clear that those comments are out there and the pentagon could not have ignored them. It is going to come out to a he said, she said. We know that trump has made critical comments about amazon and the jedi cloud contract. The question is whether those comments influenced the pentagons decisionmaking. Taylor is there a chance that this gets overturned or reopened . Naomi these kind of cases are tough to prove. Not only does amazon have to prove the pentagon was aware that trump has been very critical of amazon and jeff bezos in particular and his ownership of the washington post, but it is not going to be enough for amazon to prove that trump has a long time animosity with amazon and jeff bezos, but they will have to prove that as they were making the evaluations, that they were taking trumps comments into consideration rather than establishing a winner based on the merits. Taylor as you have been covering this, any precedent that has been set to pave the way for this case . Naomi this is an unusual case. It is not common that a sitting president would be on record openly questioning whether a bid was fair. In july, trump really surprised the industry and procurement i have beening, hearing complaints from oracle, microsoft, ibm about whether this deal was fair. Im going to ask the pentagon to order a review. As soon as he was confirmed, secretary asbury said, secretary esper said, im going to be taking another look this procurement. Normally, these things are not done in such a public and controversial matter. Taylor bloombergs naomi nix, thank you. Coming up, World Leaders are trying to teach tax big check. Big tech. Will the u. S. Stand in the way of a Global Digital tax plan coming online . This is bloomberg. Taylor this is Bloomberg Technology global link where we join bloomberg daybreak australia to bring you the latest in global tech news. Im taylor riggs in san francisco, with shery ahn in new york and paul allen in sydney. Lets take a look at the top global tech stories of the day. Paul thanks. The worlds fourth largest smartphone maker is making his making its move in japan. Xiaomi is entering the japanese market with a budget friendly smartphone and fitness tracker. The company is making the phone available for immediate preorder with shipments starting december 16. Xiaomi will face a tough challenge in japan where the market is shrinking and dominated by apple. Speaking of apple, what was once a routine corporate espionage case now involves surfacetoair missiles. The u. S. Says an engineer is accused of stealing trade secrets from a chinese startup and files for the Patriot Missile program. The documents which belong to , raytheon are not permitted to be taken outside of the department of defense secure locations. Finally, the Chinese Government is taking further steps to remove Foreign Technology from state agencies and other organizations. Beijing will likely replace as many as 20 Million Computers over the next three years. That is according to a report from china securities. The move for this increased technological independence comes amid escalating trade tensions with the u. S. Those are the top global tech stories we are watching. Shery thank you. Now to a story we have been , following. The Global Digital tax debate. The organization for Economic Cooperation and development has outlined a plan to overhaul global tax, but the u. S. Has reservations. The u. S. Wants companies to have a choice to fully opt in or out of the plan which is driven by , concerns that Big Tech Companies are not paying enough in taxes or in the right countries. Lets go to capitol hill in washington wherever Corporate Tax reporter Justice Department<\/a>s proposed final judgment. Why is that critical . Harry states will have to prove that this merger actually will or might lessen competition, particularly by raising price. The testimony referred to earlier is a critical aspect. The second is that the Justice Department<\/a>, in a separate filing has agreed that this merger will raise prices by billions of but it has come up with a dollars, remedy. If the remedy is sufficient to reduce the competitive effect or make it not anticompetitive, that could be and presumably will be a Strong Defense<\/a> by the parties. But, the plaintiff states will certainly argue that even if that remedy goes into effect, that is not enough to reduce the anticompetitive effect, going from a market with four major competitors to three. Taylor are they able to say that given the merger goes through, they are still only number two . Verizon as tell ahead of them. Does that help them . Harry not a bit. There is less competition. The fact that there is some competition, you might say, that is nice. The antitrust laws dont say we wait until we get a monopoly and stop. Congress said we stop before then. We want to stop archers that will lessen competition, not necessarily create a monopoly but will hurt competition. What, there is someone bigger than we are in the market. There is still some competition left. Taylor i want to look at a chart that i am showing to my audience. What we are showing is basically, since the proposed merger was announced, tmobile shares are off to highs and sprint shares have reacted poorly. They are now negative going back on a one year basis. This is leading a lot of analysts to speculate that we could see a settlement, given that the states have a relatively good case. Would you look for a settlement . What would a potential settlement look like . Harry that is always the problem in these cases, figuring out a settlement. A settlement is supposed to restore competition. If there were a settlement like that available, maybe the Justice Department<\/a> would have proposed it and the parties would have agreed to it. This goes back to what we talked about earlier, that the settlement that was taken, from a states point of view, is inadequate. Frankly, given the arguments about why this reduces competition, it is hard to see what a settlement would look like. I expect the states to litigate this to the end. You can always be surprised. I think what the states are saying is just say no. , this merger is anticompetitive and cant be cured. We cant create another sprint. We have one. Lets have it compete. Taylor does this case have broader implications for trumps antitrust policy . Harry i think in some ways this is a test of how the Trump Administration<\/a> is proceeding with antitrust policy. This administration has taken an aggressive position with regard any other Placement Agency<\/a> any other Enforcement Agency<\/a> having some different views of the Justice Department<\/a>. There have always been differences among the various forces among the state and federal government. This Justice Department<\/a> has been particularly vigorous in intervening in cases in which other enforcers have different views. It is not just the states. That is why i say this unusual this case is unusual to have the states litigating while the Justice Department<\/a> is settling. The Justice Department<\/a> has intervened with the federal trade commission in a case about qualcomm. It has intervened in private cases. It has been very aggressive in this way, wanting to control antitrust should look like. In general, we have the states in some ways going one way, particularly new york and california and the federal , government going another way. Taylor thank you to harry first, he has a low professor at nyu. At nyu. A law professor coming up, xerox tries to sell its plan for Hewlett Packard<\/a> to hp shareholders. We will have the details next. This is bloomberg. Taylor xerox dangling carrots in front of hp shareholders. Xerox says the tie up could create as much as one and that have billion dollars in potential Revenue Growth<\/a>. Do the math for me. Combine two companies how are you getting 1. 5 billion of future Revenue Growth<\/a> . Xerox is saying in its presentation to hp investors that, on a pro forma basis, the combined revenue would be about 66. 8 billion, with hp contributing 58 billion of that total. They are also saying that there are certain products of hp that can be sold through xerox and certain efficiencies that could be made, and they could unlock 1. 5 billion of additional revenue. The problem is, with a company that large when you are already at almost 70 billion, is 1. 5 billion enough to convince those skeptical of a deal . And it also did not answer the question of whether revenue increases over the midterm or longterm would be possible in a declining industry. Taylor Revenue Growth<\/a>, synergy sounds great. Is it realistic . Nico xerox would say yes, it is realistic. They have been crunching the math, and they have found the found that right now, hp is selling a lot of its computers and printers through either direct sales to large customers or through indirect channels, which means basically resellers. Xerox has a whole team of folks who sell to small and midsize businesses. They are saying, we can sell your pcs to our existing customers. We can have your products sold through as a service or subscription offering, and we can also have manufacturing efficiencies, supply chain efficiencies. Basically fire a lot of people. ,we can also reduce the number of vendors and suppliers we have. They are really making an argument that it is rational. Right now, the question is, will it be enough for hp shareholders to convince the company or force the company to do something . Taylor some of these are companyspecific issues. A lot of this is a structural change in the market where they are seeing declining in the printing business. Are they prepared to take on the structural change that is underway . Nico xerox has been sort of managing declines for a long time. Hp has two a certain extent. These are both businesses that know markets are shrinking. Hp got into a lot of trouble this year with investors because ink supplies started to fall and contract. The problem, some would say, in this deal, is that this would make a combined entity more subject to the whims of the printing industry, which is contracting much more than the pc industry. Hp gets most of its revenue from pcs. I think what you would see is that, if the entities combined, revenue would shrink at some point. But xerox is arguing that it is better to take control in this type of situation because the first movers that consolidate will have more power than the other Companies Left<\/a> over. Taylor thank you to bloombergs nico grant. Now to the continuing saga of wework. Goldman sachs is playing their part in keeping the Embattled Company<\/a> afloat. It is the first step in a pledge to put together a 5 billion for wework as part of the bailout. According to sources, softbank will be listed as the borrower and wework will be the coborrower. Jillian, who has been covering the story. What is 1. 8 in the scheme of the saga of wework . Jillian it will be meaningful to wework, a company that lost 1. 3 billion in the third quarter. If you think of credit financing, it is definitely a line that wework needs. It is in letters of credit. The company is going to receive 3. 3 billion in additional secured and unsecured notes. That is the second stage, the financing. Taylor what are they hoping to do with a new line of credit . Gillian they look to continue expanding in 12 key markets , which include new york and london, and they will continue to take on leases. In other cities, it is clear they will turn to a Management Agreement<\/a> type structure, which reduces lease liability. Right now, they need the cash to meet their ongoing burden. Taylor i went to take a look at a chart i am showing inside my terminal actually shows in improving picture. In turquoise, the bonds of we work maturing in 2025. Yielding 12. 8 or so. Are investors pleased with the small turnaround, tweaks, and changes we have been seeing from the company . Gillian yes. Today, the story that goldman is involved in the new financing sent the bond up four cents on the dollar, i think. More than 4 . Of creeping out of distressed level a little bit. Bondholders are feeling a little more comfortable that the company is salvageable. The 9. 5 billion rescue package is coming together. So far, softbank has had a 1. 5 billion equity injection. It is also starting a 3 billiondollar tender of her. Tender offer. When that is done, softbanks stake in wework will rise to about 80 . The credit financing of 1. 75 billion, that will shore up the company for the near future. Taylor does this give you any indication that softbank is looking to share the burden . Gillian it is not so much sharing the burden, it is putting its name behind the company that it will be the major owner of. By signing on as the borrower and having wework as the coborrower, it takes some of the risks that credit providers, banks, lenders might have some hesitant in terms of lending on its own. Softbank stepping up behind them saying, we are here, we are the fallback. Taylor it is notable to me that it was Goldman Sachs<\/a> coming through with a potential line of credit. A few months ago when we were looking at bailout options, it was also looking at a deal with jp morgan. Any thoughts of why goldman versus jp morgan . Jillian that is a very good observation. Adam is out now. That is why we read jp morgan is that front and center. Taylor bloombergs gillian tan, thank you. Speaking of wework, founder and former ceo adam neumann is looking to sell some new york residences. He is looking to sell two units that he combined into one. He paid nearly 28 Million Dollars<\/a> for those apartments. Coming up, jedi mind tricks. Amazon says that a prized government contract that microsoft won is because jeff bezos is viewed as Donald Trumps<\/a> enemy. More on all of that next. Bloomberg technology is streaming live on twitter. Check us out technology and follow our Global News Network<\/a> at quick take on twitter. This is bloomberg. Taylor a special provision was investors tolowing sell shares. The remaining locked up shares are eligible to be sold next march. Back to a story i was following apple is returning to the annual , ces tech conference for the first time in decades. This time with Consumer Privacy<\/a> on the agenda. The companys director of privacy will take the stage with facebook and a commissioner from the ftc. They will discuss regulation, consumer demand, and how companies build privacy at scale. Apple has not attended ces in an official capacity since 1992. Amazons fight over microsofts jedi win continues. The ecommerce giant claims the pentagon failed to fairly judge its contract bid because jeff bezosrump views is a political enemy. Amazon web services seeks to reopen the 10 billion cloud deal in the lawsuit. Joining us to discuss, bloombergs naomi nix in washington, d. C. What do we know about the he said, she said . Naomi amazon is contending that not only did the pentagon err in evaluating the bid, but those errors were made because President Trump<\/a> meddled. They said, look it is not clear , how much the pentagon took trumps comments into consideration when they gave the award to microsoft, but it is definitely clear that those comments are out there and the pentagon could not have ignored them. It is going to come out to a he said, she said. We know that trump has made critical comments about amazon and the jedi cloud contract. The question is whether those comments influenced the pentagons decisionmaking. Taylor is there a chance that this gets overturned or reopened . Naomi these kind of cases are tough to prove. Not only does amazon have to prove the pentagon was aware that trump has been very critical of amazon and jeff bezos in particular and his ownership of the washington post, but it is not going to be enough for amazon to prove that trump has a long time animosity with amazon and jeff bezos, but they will have to prove that as they were making the evaluations, that they were taking trumps comments into consideration rather than establishing a winner based on the merits. Taylor as you have been covering this, any precedent that has been set to pave the way for this case . Naomi this is an unusual case. It is not common that a sitting president would be on record openly questioning whether a bid was fair. In july, trump really surprised the industry and procurement i have beening, hearing complaints from oracle, microsoft, ibm about whether this deal was fair. Im going to ask the pentagon to order a review. As soon as he was confirmed, secretary asbury said, secretary esper said, im going to be taking another look this procurement. Normally, these things are not done in such a public and controversial matter. Taylor bloombergs naomi nix, thank you. Coming up, World Leaders<\/a> are trying to teach tax big check. Big tech. Will the u. S. Stand in the way of a Global Digital<\/a> tax plan coming online . This is bloomberg. Taylor this is Bloomberg Technology<\/a> global link where we join bloomberg daybreak australia to bring you the latest in global tech news. Im taylor riggs in san francisco, with shery ahn in new york and paul allen in sydney. Lets take a look at the top global tech stories of the day. Paul thanks. The worlds fourth largest smartphone maker is making his making its move in japan. Xiaomi is entering the japanese market with a budget friendly smartphone and fitness tracker. The company is making the phone available for immediate preorder with shipments starting december 16. Xiaomi will face a tough challenge in japan where the market is shrinking and dominated by apple. Speaking of apple, what was once a routine corporate espionage case now involves surfacetoair missiles. The u. S. Says an engineer is accused of stealing trade secrets from a chinese startup and files for the Patriot Missile<\/a> program. The documents which belong to , raytheon are not permitted to be taken outside of the department of defense secure locations. Finally, the Chinese Government<\/a> is taking further steps to remove Foreign Technology<\/a> from state agencies and other organizations. Beijing will likely replace as many as 20 Million Computers<\/a> over the next three years. That is according to a report from china securities. The move for this increased technological independence comes amid escalating trade tensions with the u. S. Those are the top global tech stories we are watching. Shery thank you. Now to a story we have been , following. The Global Digital<\/a> tax debate. The organization for Economic Cooperation<\/a> and development has outlined a plan to overhaul global tax, but the u. S. Has reservations. The u. S. Wants companies to have a choice to fully opt in or out of the plan which is driven by , concerns that Big Tech Companies<\/a> are not paying enough in taxes or in the right countries. Lets go to capitol hill in washington wherever Corporate Tax<\/a> reporter Laura Davison<\/a> is standing by. Explain to us this safe harbor proposal suggested by secretary mnuchin. What is the u. S. Concerned about here . Laura what the plan would do is to say instead of with the Current System<\/a> where companies saying, they are will pay taxes where there users are, which could very differently. Fine,s. Has said, this is we want to make this optional. The reason is they believe that if companies have a choice, they might be paying more taxes in the u. S. Versus other countries. This is a play to keep the u. S. Tax base within arms of the irs. Taylor big tech sort of wanted a cohesive plan because it is easier to follow. Does this even solve the problem, because it is sort of an opt in, opt out . Laura it could create confusion for companies to see which is the better deal. It opens up opportunities for companies to play a lot of games and run the numbers, come up with different case scenarios. Its a lot of work for tax lawyers and accountants, but not good for people auditing this and the countries to figure out their tax base is going to look like. Shery we know the french do not like the u. S. Proposal. Could other countries like it . Laura that is possible. You look at the countries where they have a lot of consumers, maybe not a lot of operations. India, china. France is also one of these countries where they say we have an opportunity to get more tax revenue and we want to stick with that. We dont want to give people an opportunity to opt out. This is really a key Sticking Point<\/a> going forward. This is one of the first roadblocks we have seen in these negotiations. It is not just u. S. And france. There are 130 countries total. That is going to be an issue that they are going to face as they head into the next year. They are hoping to come up with a deal by this time next year. Taylor you and shery are smartly bringing up france as they seem to be leading the way. I want you to react to a soundbite. I spoke to the minister of Digital Affairs<\/a> over in france. Take a listen. Adapting to the new framework. It is favoring the solution. It would go for a european solution. I think we need to create a level playing field. The best level is at the international level. If the americans do not want to go for that, we will go to for the european one. Taylor basically saying if they dont get a solution, they will just create a european solution. Where are we in the midst of multiple solutions . Laura this is really the big question. What the u. S. Does not want is for there to be a bunch of different solutions. Now, you have countries like france, canada, new zealand coming up with their own taxes. Having an euspecific solution would be better for the u. S. , but the best solution is to have this global solution. The question though is if they can agree to some of the terms that negotiating partners are bringing to the table. That is where we will see if this can be done. It is going to be difficult to get that done. The u. S. Treasury officials are confident they can reach some sort of agreement. Shery what do the Tech Companies<\/a> want . Laura they have not publicly said yet what they specifically want. They agree they want this multilateral deal. They also are concerned they could end up more in taxes once a deal is reached. They are looking at both simplicity and what makes dollars and cents for them. Taylor thank you to Laura Davison<\/a>. Plenty more global stories ahead. This is bloomberg. Taylor a followup to the story about the widely mocked add for palatine. Loton. Pe the commercial struck some of it being sensitive and out of touch. Now the actress has a new gig. ,she is in a commercial. They tell her she is safe there and toasted new beginnings. After, Ryan Reynolds<\/a> is one of the owners and posted the ad on twitter with the caption exercise bike not included. It is a bad year for the tv ad industry. Sales fell almost 4 in 2019, the steepest drop since the recession a decade ago signaling , that advertisers are following viewers to the internet. There are some winners emerging from this market change. Joining us to discuss, dallas lawrence, advisor at the Marketing Technology<\/a> Company Channel<\/a> factory in los angeles. Dallas, i wonder if we are not surprised the fact we are migrating from tv to internet, but perhaps what is surprising is the rate of change that tv advertising is falling off a cliff. Dallas we are seeing a maturation of television advertising. The dollars are finally following the consumer eyeballs as they migrate away from Linear Television<\/a> to streaming televisions. Six out of 10 adults stream, and they stream a lot. The average streamer watches twice as much streaming content as they do linear content. That does not take into account the 42 of u. S. Adults that say they will either cut the cord or have already. You look that the Holiday Season<\/a> now, a third of consumers say they will watch zero Live Television<\/a> during the holidays. A real challenge for marketers who spend 95 of the tv budget in the linear tv channels is becoming very aware of those dollars are moving towards where the streamers are going. There will be winners and losers. Taylor that is a fascinating statistic. You are going to watch zero ads of live tv, zero hours of live tv this Holiday Season<\/a>. Is that a new statistic . Dallas a new survey came out researching consumers that say a third say they will watch zero Live Television<\/a>. Theres three ad races to watch as we set up who is going to be the winner in the 75 billion ad race. The platform race, content race and data race. Roku is the number one smart tv operating system in the world. Hundreds of apps utilized roku. Roku sells those ads for the apps. There advertising business is up 80 yearoveryear. On the content side, a couple of platforms like hulu which is owned by disney and pluto tv that have really leaned into the ad supported model. Consumers support an ad supported model rather than subscriptionbased. Hulu, 70 of their users are ad supported. The last gets the least amount of attention. That is the data race. Television advertising today is bought and sold the way we have been doing it for 30 years. Off a few thousand settop boxes on nielsen that are trying to extrapolate the behaviors of 300 million americans. Marketers are saying that does not work. We have begun seeing Companies Like<\/a> samba tv, a company that has software on most Television Manufacturers<\/a> and devices. They are in 25 million televisions across the world. They are able to provide Realtime Data<\/a> for marketers that is driving higher roi for the marketers. For no other reason we will see , ad dollars continue to migrate to streaming because they work better. Taylor dallas, i want to break down three of those that you just touched on, one of it is roku. You take a look inside my terminal, it is the stock and the average analyst price target. The trend is up, but it has been a volatile story as investors try to figure out what streaming wars mean for roku. Do you believe you cannot launch a streaming platform unless you also do it with roku . Dallas i think roku is the undoubted winner in the streaming wars when we think about what happens in the next couple of months and what has already happened. You look at disney plus for example. Disney was seeing a million downloads. During that same timeframe, roku downloads were up 50 . People were going to get the roku operating system so they can access disney plus. They are uniquely positioned in the ecosystem to benefit from the 8 billion to 10 billion of content that is going to be spent because you need to watch it on a platform. Disney does not have a platform, neither does netflix. You will be going to your roku device. You have seen the roku television. It is the number one tv operating system in the world. You can buy a 55 inch smart 4k tv for 200. They are in great position today. Taylor you talk about some of the winners, namely hulu, which makes me wonder if it is a price or content . Do i like hulu because it is four dollars, five dollars a month and not 15 a month . Or is it a content story . Dallas hulu is having their cake and eating it too. They are offering the user either the subscription model that has no ads or the adbased model. The user is getting to pick and choose what they want. We have seen that 58 of u. S. Consumers prefer an adsupported model, around five dollars, six dollars a month. 40 prefer subscriptionbased model. I think the real challenge has to be for netflix. I said i believe netflix will have to introduce an advertising supported model. They have reached a saturation point. They cannot raise their price any higher with disney undercutting them. What hulu has done is they have read the market and understand there is an appetite for both and they offered both. Taylor i could do this all day long. Dallas lawrence of channel factory, thank you for joining us. Now for a weekly look at the future of work in our series, work shifting. This week, we have been diving into increasingly competitive software as a service market. The company, kustomer, just raised about 60 million in series e funding round. The fourth round of funding in 18 months. It is taking on big players like salesforce and working with brands like rent the runway and more. Joining us to explain how they differentiate from their competitors, we are joined by ceo and cofounder brad birnbaum. With 60 million, you take on new customers, do you hire . What do you do next . Brad we are focused on reimagining customer service. We are expanding in many different ways. We are expanding in different verticals. We are doing well with retail, gig economy type companies, internet of things type companies. With additional capital, we are seeing great traction internationally and will continue to double down on that effort. Taylor we hear software as a Service Turnaround<\/a> a lot, ai. Give me a reallife example of how i would use your service and how it translates for the customer. Brad we rolled out kustomer iq, our Machine Learning<\/a> platform. Customers are able to view the vast amount of data they provide us with amazing support experiences to optimize the experience they are able to provide. They might be able to use Machine Learning<\/a> for automated. Artificial intelligence and Machine Learning<\/a> for suggesting chat bots onfor how to respond to customers. They will be able to optimize those experiences. Taylor i want to talk about ai because we talk a lot about that and you have talked about ai able to transform the customer experience. Is ai all that its cracked up to be . Brad it has come a long way and we are taking true medicine we are taking a tremendous benefit. Because we are able to leverage the vast amounts of data we are provided by our companies, we can do some Amazing Things<\/a> with it and it is just the tip of the iceberg. Taylor how are you keeping Customer Data<\/a> safe . Brad there are many things we are doing. It is encrypted. We are hippa compliant. We follow all of the various regulations. Access to data is incredibly protected within our system. We are rolling out our next generation of our platform which , will further enhance who can see what, who can do what and how we are furthering protecting the data for customers. Taylor you talk a lot about ai being able to measure sentiment of a brand. How are you doing that . Brad there are a lot of great tools we are taking advantage of. We do read all Text Communications<\/a> between companies and customers. We are able to run that through our Sentiment Analysis<\/a> engine to decide whether it is positive or negative. We track that over time. We are able to see if the customer has been historically happy with that company and recently unhappy, and perhaps do something from a marketing perspective to nurture that customer. We are taking advantage of that, coupled with csat, which is what customers tell you versus nps, nlp which is us reading the interpretations, we can get the full picture of the customer. Taylor many notable investors what is the most asked question you have gotten from investors this year . Brad they are focused on the opportunity in front of us. With a total adjustable market, it is very large and growing rapidly. They want to understand how we are taking on it is david and goliath they want to know how we are taking on salesforce. How our product differentiates. It is far more modern. Many people have told us if they were to build their products today, this is how they would build it. What they are fascinated on because it is such a large opportunity, are we the right company to take those companies on . I think based on the roster of investors we have gotten, i think the answer is yes. Taylor kustomers brad birnbaum, thank you for joining us. Brad thank you. Taylor still ahead, will the u. K. Election result in brexit uncertainty . And, how it will affect the Tech Industry<\/a> . That is next. This is bloomberg. Maria the European Commission<\/a>s will review the way eu the way antitrust regulators Way Industries<\/a> following criticism she was too rigid, finding google and blocking telecom deals. Now, she is best known for finding American Companies<\/a> to day rules that go back decades. She said Digital Companies<\/a> have cratered an earthquake in europe and the new challenges mean the European Commission<\/a> will have to use different tools. Regulators will aim to look at the Way Companies<\/a> operate, but also the way customers interact with them. And most crucially, whether or not they are able to find other alternatives. She cited the case of googles android and apples ios system. In that case, the European Commission<\/a> ruled that googles dominant position was not challenged by apple. Maria tadeo, bloomberg news, brussels. Taylor with just days until the u. K. Election, opinion polls show Boris Johnsons<\/a> party is on course to win a majority which would pave the way for a brexit vote in parliament by january 31. For insight on how this can affect the regions tech sector, we are joined by Alastair Mitchell<\/a> of eqt ventures. It is the Venture Capital<\/a> arm of the swedish company. If we were to face a brexit, which we think we have been getting for multiple years, how does that change the tech sector and hiring . Alastair it is great to be here talking about this. This is a subject that is talked almost nonstop about, because it has been going on for a long time. I think everyone has realized no matter what happens in the election, there is going to be continued uncertainty. Even if it goes the conservatives way, there has to be a deal hammered out. We all know from the previous deal that there was many years of transition between european framework to one where the u. K. Plays a lesser part. Taylor has this uncertainty weighed on Consumer Sentiment<\/a> . Alastair absolutely. Especially in the tech sector which is very fastgrowing and relies a lot on crosscultural, crosscountry talents and investments. For sure, over the last two to three years, an awful lot of uncertainty in london. There have been funds that were not able to raise. Lps that can no longer invest in u. K. Funds. There have been companies that might have started in london starting somewhere else. There has been a lot of uncertainty. That has not hurt europe. Europe as a whole has done very well over the last few months. Last quarter, 8. 7 billion euros invested in european startups. That is a massive record. This year has already beaten last year on how much is invested in europe. But, it has meant what london may have taken a bigger share of has now flown to other places like paris or berlin. Taylor as an investor, are you more comfortable going to other cities in europe to get away from the uncertainty in london . Alastair we are a european fund. We invest in a european startups Going International<\/a> and u. S. Startups going into europe. We just raised almost three quarters of a billion dollars to invest in european startups. We are huge believers. But, it does mean we look across europe. We rose before, maybe 50 of the deals were in london and the rest were spread out. Now, you are seeing a bigger spread in berlin and across europe, eastern europe. It is much more localized. Lots more startups staying where they are because of the talent you have got there and the rise of investors not just looking in one location. Taylor have you had to look at tech visas in london and how you basically hire talent . Alastair we have the luxury of looking across europe. 40 of the last quarter of startup funding in europe came from u. S. And asian funds which is a record. Sore and more of the big name are piling into europe. They are starting to locate in london, specifically because of geography and language. For us, we can find the best startups. Before joining as an investor, yeah, you care a lot about visas. The bet for u. K. Based startups is there will be some visas that will make it easy to bring an bring in amazing talent. Or remote working. You can have teams living in local country starting from wherever you are. Taylor eqt ventures Alastair Mitchell<\/a>, thank you for joining us. Brexit story and tech story folding into one. That does it for this edition of Bloomberg Technology<\/a>. Bloomberg technology is livestreaming on twitter. Check us out, technology. Be sure to follow our global breaking news network, quicktake, on twitter. This is bloomberg. Again chinese inflation partaking prices to the fastest increase since 2012. And Holding Pattern<\/a> had of critical event this week. We have the deadline on december 15. Plansarabia reveals the and we hear from the finance minister. Sectors that are promising, that are quite large","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia903109.us.archive.org\/27\/items\/BLOOMBERG_20191210_040000_Bloomberg_Technology\/BLOOMBERG_20191210_040000_Bloomberg_Technology.thumbs\/BLOOMBERG_20191210_040000_Bloomberg_Technology_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240716T12:35:10+00:00"}