Transcripts For BLOOMBERG Best Of Bloomberg Technology 20240

We will talk predictions for Tech Companies in the new year, as well as what tech trends we will see in the next decade. The battle for tech privacy in 2020. Wednesday marks the official start of the California Consumer privacy act. This law is meant to give users transparency on what Data Companies collect about them, as well as the right to Block Companies from selling that information. For a look at what to expect this year, in the battle to protect Consumers Digital lives, i talked to reece hirsch, a partner at morgan lewis. Also with him, eric newcomer, who covers the intersection of tech and government. You know, this is probably the most important privacy legislation in the United States today. It is an economic powerhouse. We dont have a federal privacy legislation, so this is important for California Companies and users in california, but also all over the United States. It means that companies are going to have to disclose what data they collect to users, and then let users delete data that they dont Want Companies to keep. There are also going to have to be much more mindful about the data they retain, and disclosing the data that they are going to keep to users. Taylor what is it about ccpa that makes it, in your opinion, one of the biggest data privacy laws frankly that we have ever seen . We have never seen a lot this comprehensive regulating privacy in the u. S. And because california is such a huge market, it is going to have a large impact on National Companies and the data they collect, even outside of california. Privacy regulation in the u. S. Has been a pretty patchwork affair so far, but this is a very comprehensive, rigorous approach that creates a host of new privacy rights for consumers that they have never had before. Taylor eric, if you look in your reporting, youre also looking at ccpa coming into effect, but there could be differing Ballot Initiatives that pose some changes to the laws. What potential changes could we be facing . Eric right. So there might be a referendum in california on the ballot in 2020, which would sort of lock in a lot of ccpa, and expand its provisions, make it harder for california legislators to chip away at the bill. So thats one thing. Then you have illinois, new york, Washington State looking at bills, then there is still this stream of federal legislation, the idea that the Senate Commerce committee could come up with a piece of compromised legislation that could solve this problem nationally. There is just a lot of moving pieces. If you are a company trying to figure out, ok, is it just about complying with the current state of california privacy law . Am i watching other states . Is there a federal law . Then, what changes if there is a referendum . Taylor reece, what the potential changes do you see that could be big changes from what we currently have . Reece the ccpa was created through a Ballot Initiative initially, so it is continuing to evolve and very possible that this new Ballot Initiative will be on the ballot in november. It will, if anything, strengthen the ccpa, and make a number of significant changes, like changing the enforcement agency. It would take jurisdiction away from the California Attorney general and give it to a new agency regulating privacy in california. Taylor reece, do you see california as the beginning of a federal privacy law . Reece california has always been a trendsetter in privacy regulation. I think that is definitely proving to be the case already, because, as eric mentioned, there are laws in new york, illinois, and washington and other states that seem to take their cues from the ccpa. I think right now the chances of federal privacy legislation appear to be stalled, but if you have states around the country adopting new laws that either are similar to the ccpa, or take the ccpa a step or two further, you could have an enormously complex regulatory landscape for businesses in very short order. And i think that if you reach that pain threshold where businesses are finding it very difficult to reconcile all these conflicting requirements, that could finally be the impetus for federal legislation. Taylor eric, in your opinion, what do you see as the big driver for federal legislation . Is it the fact that businesses will be so confused by multiple different state laws that they really do need a federal law to lead the way . Eric i think there are these two different tension points. On the one side, there is this private right of action or the general push on sort of consumer advocates and more of the democrats to give strong enforcement on any privacy legislation that passes. That is a key piece of debate in a federal law. That is a sticking point. How much are the states funding the enforcement . That is part of the california referendum. Like we talked about earlier. Then, the other side is whether were going to have the federal law consume everything, basically, federal preemption. That takes over and kills all the state bills and makes the federal bill sort of the law of the land. That is what the republicans are fighting for in the businesses. You see the debate. Do we have federal preemption and a private right of action . Do we have neither . Thats where the debate remains. The small pieces of the bill, people tend to agree, but it is those big ideas, how we enforce it and whether the federal law is the ultimate law on privacy. That is still up for debate and that is why congress is stuck. Taylor what are you hearing from businesses just from a high level in terms of being compliant with ccpa and if that isnt a big deal because they are already compliant with a broader level of data privacy . Reece it is true that gdpr is a major european privacy law that went into effect last year, or the year before last. The ccpa does draw upon a lot of the concepts in gdpr. But thats a law that applies to data of european residents. So, even for Big Companies that have implemented gdpr compliance, they havent necessarily done it for their u. S. Operations. Also, ccpa has its own set of requirements and nuances. The fact that you have done gdpr does not necessarily mean that you are all the way there by any means with ccpa. Taylor that was reece hirsch, partner at morgan lewis, and bloombergs eric newcomer. Coming up, get ready for a whole new slew of cyberattacks in 2020. We will talk about what fastgrowing crowdstrike is doing to address those threats, next. And if you like bloomberg news, check us out on the radio on the bloomberg app, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. Taylor new year, new threats. Cybersecurity trends in 2020 will include new mobile risks. In addition, hackers are expected to employ Machine Learning in attacks, and the cloud will prove Fertile Ground for compromise. Cybersecurity tech firm crowdstrike provides Threat Intelligence and cyberattack Response Services meant to deal with such risks. The company is also the top security pick for analyst Alex Henderson. Basically, there is two points i would make. First one is, we believe security is an area that absolutely has to see more spending. It is a primary focus not just in terms of i. T. , but at the board level. To that extent, we think that there is clearly going to be a very significant increase in spending, particularly as we get closer and closer to the election. It will become more of an issue. We particularly Like Companies that are in the cloud or direct segment of the marketplace that have a cloudnative solution. I had heard your last guest talk about security in the cloud. What we want to highlight here is that these are companies that are in the cloud natively, that are used to protect Companies Directly from the cloud, as opposed to connections between aws, microsoft azure, or Something Like that, where it is a cloud connection, but not necessarily secure. Quite different from what he was referring to. But ultimately, the reason we like crowdstrike is we think the companys growth will continue to be well in excess of 50 over the course of the next year. The street has it slowing down to about 30 growth by the end of the year. I think that is too steep of a deceleration from the 100 growth they posted last quarter. Additionally, any upside you get in revenue demonstrates significant margin leverage. So we think there is good upside to both their revenue and the margin side of the equation. We believe crowdstrike is one of the Key Solutions to Security Problems that enterprises are facing. Taylor so you paint a positive picture in terms of enterprises and corporations increasing their spend on cybersecurity. But what is crowdstrike doing we believe crowdstrike is one of specifically that perhaps other companies are not to take advantage of that positive backdrop . Alex sure. Let me delineate between the winners and the losers here in the security space. We very strongly believe that the world of perimeter defense, where you basically put an i. T. Stack at the edge of your data center, is no longer a valid security solution. While you still need to do that, the world is shifting to what i would call a cloud direct solution. Companies like okta, zscaler, crowdstrike, Companies Like mine cast and proof point are in the cloud and delivering cloud security. The companies that are in the perimeter side of it, like palo alto, checkpoint, these companies are trying to do a perimeter defense model where you are essentially trying to keep the bad guy out. You are just never going to win at that. There was a recent Security Survey where 76 of chief Security Officers at enterprise expected that they would be hacked in the next 12 months. 60 of those said that they did not think they would know it when it happened. That is a function of the failure of perimeter defense to work. All a bad guy has to do is get through once. You have to keep them out 100 of the time. It is pretty obvious that is not working. We are moving to a world of zero trust or cloud direct security. These companies that are in the cloud that are delivering that i think, ultimately, are the winners and will be the next generation of Security Companies and will gain share in perimeter in the industry. Taylor thanks to Alex Henderson of needham. As for those new Cyber Threats on the horizon, we got insight from one of the most Renowned Experts in the field, Tom Kellerman of vmware. He served on the commission on cybersecurity under president barack obama. Tom it has become a functionality of conducting business in todays world. You have to appreciate that all the major organized crime syndicates in the world have created Business Models around hacking. You have a rogue nationstates with dedicated cyberattack divisions. Geopolitical tension continues to manifest in cyberspace. With things like the trade war and other Current Events around the global stage. Taylor you know, tom, i wonder who is most at risk. I talked to cybersecurity experts and they say it is the employees. That we are exposing the companies. Financial institutions are always a big threat. Who, in your opinion, really poses the biggest risk in 2020 . Tom i think there is a shift in how hackers are hacking. They have moved away from burglary to home invasion. It is a lot more dangerous in that they will take over and commandeer your Digital Transformation efforts and use your infrastructure, your website, your mobile app, and a network to attack your customers. Your brand will be used against your constituency, and thats the awakening that must be had in corporate america. Taylor i want to fold in the election. As you look at 2020, are we more prepared than 2016 . Tom i would say we are more prepared, because we are aware of the antics that certain nationstates will implement to leverage democracy. There is very few states that have taken up the free assistance provided by the department of Homeland Security to better secure the electoral system. Frankly, many states are hamstrung, with limited budgets and capabilities to do an effective job in thwarting nationstates. Christopher wray says he sees activities by at least three nationstates that are targeting our electoral system. Not all of which have the same goal in mind. Taylor what are the ways in which you see hackers getting to us in 2020 . Is it as simple as the voting machine or something much more enhanced . When it comes to the individual or the corporation, we need to be wary of our information supply chains, Cloud Service providers, outside general councils, outside marketing firms that we utilize. Even as individuals in the same regard, because those entities will be attacked, and their infrastructures will essentially be jacked in order to target us and our constituencies as a whole. More importantly, what carbon black or vmware Carbon Black Research has shown is there is a dramatic uptick of destructive attacks where hackers are manipulating the integrity of data, and changing either the way a corporation operates or an individual thinks specific to their devices and digital environments. Taylor i love that you brought up the cloud, because we have grown up thinking the cloud is secure and safe. Is the cloud more at risk than we think it is . Tom not all clouds are created equal. Honestly, the whole purpose behind what we are focused on here at vmware is to build in intrinsic security into the environment across the entire stack. You cant try to retrofit security on cloud environments. You have to build it in from the beginning. You have to understand that an adversary will use that environment to attack your constituency, so you have to have greater visibility in how you suppress that adversary in realtime. It really depends on the strategy and the amount of dedication of the organization to securing their cloud. That varies by industry and corporation. Taylor tom, you were saying that some of the biggest threats are coming from russia, iran, china. How are they differing in their approaches . Tom well, frankly, you know, you have a 50year plan espoused by china for information dominance. I do see that as the trade war is cooling, you will see lesser and lesser attacks by chinese hackers against american corporations, hopefully. But you see north korea and iran now having teams with cyberattack capabilities and they are willing to destroy data, they are willing to attack infrastructure and leverage attacks against your constituencies. This is compounded by the fact that the cold war is alive and well. Russian techniques are very much focused on undermining the institutions of the west and the validity and integrity we place upon all sorts of things, from democracy, to our own data. Taylor that was Tom Kellerman of vmware. Coming up, drumroll for tesla. The company delivered its first chinamade model 3 to customers in china before the end of 2019. Was it enough to help meet its delivery goal for the year . And, a conversation with the cofounders of grab. From ridesharing to food delivery, we look ahead to the future of the singaporebased tech company. This is bloomberg. Taylor this week marked a major milestone for tesla in the Worlds Largest market. The first 15 units of model 3 sedans assembled at teslas new multibilliondollar shanghai plant were delivered on monday. I discussed the significance of the occasion with bloomberg auto reporter craig trudell. Craig the red bars in that chart signify just how much people are expecting china to sort of carry the water for the general ev market. That is really the case for tesla as well, and the reason why people have been so optimistic about this company. When you look at the rally that abigail just talked about, it is a significant portion of the reason why investors are growing so bullish with this company. Obviously, people were willing to give elon musk a little more benefit of the doubt after the Third Quarter Earnings Release when they reported a surprise profit. But really, the optimism that you have seen more recently that this is a company that will be able to unlock significantly more potential in the china market is a sort of a bet that is being made here. To answer your question, though, it is a little unclear at this point just how much this will have a significant effect on tesla, because we are not seeing the price of the model 3 drop significantly yet. What we may find is that the company will be able to bring the price down for the model 3 once it is able to localize more of the content of that car and the sedans that it is building in the shanghai giga factory are more sort of, you know, localized in that market. Taylor are those production targets for that shanghai factory realistic this time around . Craig you know, its funny. We talk about how much of a heated debate there is over the stock. Part of that is because there is this shakiness of execution relative to the promises musk tends to make. This is a ceo that has talked about, early on, being able to make 1000 of these cars a week, at some point getting to 3000. Hes talked about the idea that the longterm demand picture for tesla in china could be around 5000 per week. But the analyst at cowen, who we have talked about earlier, who is a little more on the bearish side, is skeptical that the company will be able to hit those levels, especially with the Tech Companies<\/a> in the new year, as well as what tech trends we will see in the next decade. The battle for tech privacy in 2020. Wednesday marks the official start of the California Consumer<\/a> privacy act. This law is meant to give users transparency on what Data Companies<\/a> collect about them, as well as the right to Block Companies<\/a> from selling that information. For a look at what to expect this year, in the battle to protect Consumers Digital<\/a> lives, i talked to reece hirsch, a partner at morgan lewis. Also with him, eric newcomer, who covers the intersection of tech and government. You know, this is probably the most important privacy legislation in the United States<\/a> today. It is an economic powerhouse. We dont have a federal privacy legislation, so this is important for California Companies<\/a> and users in california, but also all over the United States<\/a>. It means that companies are going to have to disclose what data they collect to users, and then let users delete data that they dont Want Companies<\/a> to keep. There are also going to have to be much more mindful about the data they retain, and disclosing the data that they are going to keep to users. Taylor what is it about ccpa that makes it, in your opinion, one of the biggest data privacy laws frankly that we have ever seen . We have never seen a lot this comprehensive regulating privacy in the u. S. And because california is such a huge market, it is going to have a large impact on National Companies<\/a> and the data they collect, even outside of california. Privacy regulation in the u. S. Has been a pretty patchwork affair so far, but this is a very comprehensive, rigorous approach that creates a host of new privacy rights for consumers that they have never had before. Taylor eric, if you look in your reporting, youre also looking at ccpa coming into effect, but there could be differing Ballot Initiatives<\/a> that pose some changes to the laws. What potential changes could we be facing . Eric right. So there might be a referendum in california on the ballot in 2020, which would sort of lock in a lot of ccpa, and expand its provisions, make it harder for california legislators to chip away at the bill. So thats one thing. Then you have illinois, new york, Washington State<\/a> looking at bills, then there is still this stream of federal legislation, the idea that the Senate Commerce<\/a> committee could come up with a piece of compromised legislation that could solve this problem nationally. There is just a lot of moving pieces. If you are a company trying to figure out, ok, is it just about complying with the current state of california privacy law . Am i watching other states . Is there a federal law . Then, what changes if there is a referendum . Taylor reece, what the potential changes do you see that could be big changes from what we currently have . Reece the ccpa was created through a Ballot Initiative<\/a> initially, so it is continuing to evolve and very possible that this new Ballot Initiative<\/a> will be on the ballot in november. It will, if anything, strengthen the ccpa, and make a number of significant changes, like changing the enforcement agency. It would take jurisdiction away from the California Attorney<\/a> general and give it to a new agency regulating privacy in california. Taylor reece, do you see california as the beginning of a federal privacy law . Reece california has always been a trendsetter in privacy regulation. I think that is definitely proving to be the case already, because, as eric mentioned, there are laws in new york, illinois, and washington and other states that seem to take their cues from the ccpa. I think right now the chances of federal privacy legislation appear to be stalled, but if you have states around the country adopting new laws that either are similar to the ccpa, or take the ccpa a step or two further, you could have an enormously complex regulatory landscape for businesses in very short order. And i think that if you reach that pain threshold where businesses are finding it very difficult to reconcile all these conflicting requirements, that could finally be the impetus for federal legislation. Taylor eric, in your opinion, what do you see as the big driver for federal legislation . Is it the fact that businesses will be so confused by multiple different state laws that they really do need a federal law to lead the way . Eric i think there are these two different tension points. On the one side, there is this private right of action or the general push on sort of consumer advocates and more of the democrats to give strong enforcement on any privacy legislation that passes. That is a key piece of debate in a federal law. That is a sticking point. How much are the states funding the enforcement . That is part of the california referendum. Like we talked about earlier. Then, the other side is whether were going to have the federal law consume everything, basically, federal preemption. That takes over and kills all the state bills and makes the federal bill sort of the law of the land. That is what the republicans are fighting for in the businesses. You see the debate. Do we have federal preemption and a private right of action . Do we have neither . Thats where the debate remains. The small pieces of the bill, people tend to agree, but it is those big ideas, how we enforce it and whether the federal law is the ultimate law on privacy. That is still up for debate and that is why congress is stuck. Taylor what are you hearing from businesses just from a high level in terms of being compliant with ccpa and if that isnt a big deal because they are already compliant with a broader level of data privacy . Reece it is true that gdpr is a major european privacy law that went into effect last year, or the year before last. The ccpa does draw upon a lot of the concepts in gdpr. But thats a law that applies to data of european residents. So, even for Big Companies<\/a> that have implemented gdpr compliance, they havent necessarily done it for their u. S. Operations. Also, ccpa has its own set of requirements and nuances. The fact that you have done gdpr does not necessarily mean that you are all the way there by any means with ccpa. Taylor that was reece hirsch, partner at morgan lewis, and bloombergs eric newcomer. Coming up, get ready for a whole new slew of cyberattacks in 2020. We will talk about what fastgrowing crowdstrike is doing to address those threats, next. And if you like bloomberg news, check us out on the radio on the bloomberg app, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. Taylor new year, new threats. Cybersecurity trends in 2020 will include new mobile risks. In addition, hackers are expected to employ Machine Learning<\/a> in attacks, and the cloud will prove Fertile Ground<\/a> for compromise. Cybersecurity tech firm crowdstrike provides Threat Intelligence<\/a> and cyberattack Response Services<\/a> meant to deal with such risks. The company is also the top security pick for analyst Alex Henderson<\/a>. Basically, there is two points i would make. First one is, we believe security is an area that absolutely has to see more spending. It is a primary focus not just in terms of i. T. , but at the board level. To that extent, we think that there is clearly going to be a very significant increase in spending, particularly as we get closer and closer to the election. It will become more of an issue. We particularly Like Companies<\/a> that are in the cloud or direct segment of the marketplace that have a cloudnative solution. I had heard your last guest talk about security in the cloud. What we want to highlight here is that these are companies that are in the cloud natively, that are used to protect Companies Directly<\/a> from the cloud, as opposed to connections between aws, microsoft azure, or Something Like<\/a> that, where it is a cloud connection, but not necessarily secure. Quite different from what he was referring to. But ultimately, the reason we like crowdstrike is we think the companys growth will continue to be well in excess of 50 over the course of the next year. The street has it slowing down to about 30 growth by the end of the year. I think that is too steep of a deceleration from the 100 growth they posted last quarter. Additionally, any upside you get in revenue demonstrates significant margin leverage. So we think there is good upside to both their revenue and the margin side of the equation. We believe crowdstrike is one of the Key Solutions<\/a> to Security Problems<\/a> that enterprises are facing. Taylor so you paint a positive picture in terms of enterprises and corporations increasing their spend on cybersecurity. But what is crowdstrike doing we believe crowdstrike is one of specifically that perhaps other companies are not to take advantage of that positive backdrop . Alex sure. Let me delineate between the winners and the losers here in the security space. We very strongly believe that the world of perimeter defense, where you basically put an i. T. Stack at the edge of your data center, is no longer a valid security solution. While you still need to do that, the world is shifting to what i would call a cloud direct solution. Companies like okta, zscaler, crowdstrike, Companies Like<\/a> mine cast and proof point are in the cloud and delivering cloud security. The companies that are in the perimeter side of it, like palo alto, checkpoint, these companies are trying to do a perimeter defense model where you are essentially trying to keep the bad guy out. You are just never going to win at that. There was a recent Security Survey<\/a> where 76 of chief Security Officers<\/a> at enterprise expected that they would be hacked in the next 12 months. 60 of those said that they did not think they would know it when it happened. That is a function of the failure of perimeter defense to work. All a bad guy has to do is get through once. You have to keep them out 100 of the time. It is pretty obvious that is not working. We are moving to a world of zero trust or cloud direct security. These companies that are in the cloud that are delivering that i think, ultimately, are the winners and will be the next generation of Security Companies<\/a> and will gain share in perimeter in the industry. Taylor thanks to Alex Henderson<\/a> of needham. As for those new Cyber Threats<\/a> on the horizon, we got insight from one of the most Renowned Experts<\/a> in the field, Tom Kellerman<\/a> of vmware. He served on the commission on cybersecurity under president barack obama. Tom it has become a functionality of conducting business in todays world. You have to appreciate that all the major organized crime syndicates in the world have created Business Models<\/a> around hacking. You have a rogue nationstates with dedicated cyberattack divisions. Geopolitical tension continues to manifest in cyberspace. With things like the trade war and other Current Events<\/a> around the global stage. Taylor you know, tom, i wonder who is most at risk. I talked to cybersecurity experts and they say it is the employees. That we are exposing the companies. Financial institutions are always a big threat. Who, in your opinion, really poses the biggest risk in 2020 . Tom i think there is a shift in how hackers are hacking. They have moved away from burglary to home invasion. It is a lot more dangerous in that they will take over and commandeer your Digital Transformation<\/a> efforts and use your infrastructure, your website, your mobile app, and a network to attack your customers. Your brand will be used against your constituency, and thats the awakening that must be had in corporate america. Taylor i want to fold in the election. As you look at 2020, are we more prepared than 2016 . Tom i would say we are more prepared, because we are aware of the antics that certain nationstates will implement to leverage democracy. There is very few states that have taken up the free assistance provided by the department of Homeland Security<\/a> to better secure the electoral system. Frankly, many states are hamstrung, with limited budgets and capabilities to do an effective job in thwarting nationstates. Christopher wray says he sees activities by at least three nationstates that are targeting our electoral system. Not all of which have the same goal in mind. Taylor what are the ways in which you see hackers getting to us in 2020 . Is it as simple as the voting machine or something much more enhanced . When it comes to the individual or the corporation, we need to be wary of our information supply chains, Cloud Service<\/a> providers, outside general councils, outside marketing firms that we utilize. Even as individuals in the same regard, because those entities will be attacked, and their infrastructures will essentially be jacked in order to target us and our constituencies as a whole. More importantly, what carbon black or vmware Carbon Black Research<\/a> has shown is there is a dramatic uptick of destructive attacks where hackers are manipulating the integrity of data, and changing either the way a corporation operates or an individual thinks specific to their devices and digital environments. Taylor i love that you brought up the cloud, because we have grown up thinking the cloud is secure and safe. Is the cloud more at risk than we think it is . Tom not all clouds are created equal. Honestly, the whole purpose behind what we are focused on here at vmware is to build in intrinsic security into the environment across the entire stack. You cant try to retrofit security on cloud environments. You have to build it in from the beginning. You have to understand that an adversary will use that environment to attack your constituency, so you have to have greater visibility in how you suppress that adversary in realtime. It really depends on the strategy and the amount of dedication of the organization to securing their cloud. That varies by industry and corporation. Taylor tom, you were saying that some of the biggest threats are coming from russia, iran, china. How are they differing in their approaches . Tom well, frankly, you know, you have a 50year plan espoused by china for information dominance. I do see that as the trade war is cooling, you will see lesser and lesser attacks by chinese hackers against american corporations, hopefully. But you see north korea and iran now having teams with cyberattack capabilities and they are willing to destroy data, they are willing to attack infrastructure and leverage attacks against your constituencies. This is compounded by the fact that the cold war is alive and well. Russian techniques are very much focused on undermining the institutions of the west and the validity and integrity we place upon all sorts of things, from democracy, to our own data. Taylor that was Tom Kellerman<\/a> of vmware. Coming up, drumroll for tesla. The company delivered its first chinamade model 3 to customers in china before the end of 2019. Was it enough to help meet its delivery goal for the year . And, a conversation with the cofounders of grab. From ridesharing to food delivery, we look ahead to the future of the singaporebased tech company. This is bloomberg. Taylor this week marked a major milestone for tesla in the Worlds Largest<\/a> market. The first 15 units of model 3 sedans assembled at teslas new multibilliondollar shanghai plant were delivered on monday. I discussed the significance of the occasion with bloomberg auto reporter craig trudell. Craig the red bars in that chart signify just how much people are expecting china to sort of carry the water for the general ev market. That is really the case for tesla as well, and the reason why people have been so optimistic about this company. When you look at the rally that abigail just talked about, it is a significant portion of the reason why investors are growing so bullish with this company. Obviously, people were willing to give elon musk a little more benefit of the doubt after the Third Quarter<\/a> Earnings Release<\/a> when they reported a surprise profit. But really, the optimism that you have seen more recently that this is a company that will be able to unlock significantly more potential in the china market is a sort of a bet that is being made here. To answer your question, though, it is a little unclear at this point just how much this will have a significant effect on tesla, because we are not seeing the price of the model 3 drop significantly yet. What we may find is that the company will be able to bring the price down for the model 3 once it is able to localize more of the content of that car and the sedans that it is building in the shanghai giga factory are more sort of, you know, localized in that market. Taylor are those production targets for that shanghai factory realistic this time around . Craig you know, its funny. We talk about how much of a heated debate there is over the stock. Part of that is because there is this shakiness of execution relative to the promises musk tends to make. This is a ceo that has talked about, early on, being able to make 1000 of these cars a week, at some point getting to 3000. Hes talked about the idea that the longterm demand picture for tesla in china could be around 5000 per week. But the analyst at cowen, who we have talked about earlier, who is a little more on the bearish side, is skeptical that the company will be able to hit those levels, especially with the Chinese Government<\/a> pulling back on subsidies. We have seen the ev market in china really struggle as a result of that pullback. Taylor we heard from the general manager of tesla in china on their goals. Take a listen to what he had to say. Our goal is to sell all vehicles manufactured at our shanghai factory. We are confident in achieving that. Taylor you heard it there, they want to sell all their vehicles in shanghai. I wonder, what is the Downside Risk<\/a> here . That maybe the bulls are wrong, and china doesnt live up to what it said . Craig that is a real question, because this is a company that has not paid a significant amount of money for the factory that they built so quickly. A sort of an undertheradar Development Last<\/a> week was the company securing some financing from local banks for that factory. This is a tab that they are only sort of paying off going forward, as opposed to something they have paid for already. Meanwhile, you have a company, and in musk, a company that has endless ambitions. He has already moved on to the next factory that he wants to build outside berlin. So for this rally to be sustainable, musk is going to have to deliver some sustainable earnings, something they have not been able to do up to this point. Taylor that was bloombergs craig trudell. Coming up, a conversation with the cofounders of grab. How this singaporebased tech company is entering the very competitive ridesharing and food Delivery Business<\/a> next. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Taylor welcome back to the best of Bloomberg Technology<\/a>. I am taylor riggs. About 40 of singaporeans have poor access to banking and Financial Services<\/a> access. But two companies are looking to change that. This company and singapore to look at locations grab holdings and singapore telecommute issues have teamed up to apply for a Digital Banking<\/a> license this year. The Monetary Authority<\/a> of singapore wants to grant as many as five personal bank licenses to boost tradition and innovation. Several other groups have expressed in applying, including alibaba founder jack ma. Cofounders anthony tan and hooi ling tan met at harvard as mba students. The two spoke to bloombergs emily chang in an exclusive interview in may. We will hear how they have their sites set on making grab a super app. Anthony it is not just softbank. If you think about it, the first 3 billion raised by softbank, it was raised from toyota to hyundai, to booking to microsoft, open hammer. You talk about, we are very blessed with the global best names one can imagine. Emily why continue to raise money rather than going into public projects . Hooi ling because of ambition, which involves a broader set of services for our customers. There needs to be additional innovation and additional investments, and those are investments that our partners, we identify the opportunity and they are like, we understand and we want you to do it. They are encouraging us to go bigger, bolder, and better so we can Service Southeast<\/a> asia more consistently. Emily tell me about your relationship with masa. He has said you can have unlimited capital from him, yet i assume you are not asking for unlimited capital. [laughter] anthony masa and i are extremely close. We are blessed to have a mentor and a friend and partner in this journey. But, i will not right now need that capital or want that capital today, because we have enough capital to invest in what we need today. Emily ling, you told me you surpassed 1 billion in revenue last year, that you are on track to double that this year. Where is the growth going to come from . Hooi ling in terms of countries and regions in Southeast Asia<\/a>, the biggest trajectory growth area we see is indonesia, and we are doubling and tripling down there as well. Emily how far away is profitability . Anthony in certain markets, it is already profitable. Are doubling and tripling down for us, it is important that we build and create more value. It is very easy to say, hey, youre the most popular app, and just chill, as opposed to say, we are the most popular app, but there are lots of competitors, so we need to make sure we deliver more value so that we underwrite our customers to keep keeping us as the single most popular leading ridehailing app. Emily uber cant say when it will be profitable, and that has been a problem for investors. Are you learning from that . Anthony it is different. It is different. First of all, uber, the majority of its business is ridehailing today. Plus, obviously, food delivery. Lyft as well is ridehailing. The point is, we see ourselves as i would compare us more to wechat. Emily will grab go public . We have no plans to go ipo. For us, choosing longterm strategics as part of our tech for good, working and conationbuilding. When we talk about nationbuilding, it is not five months, it is the next 5, 10, 15, 20 years. Emily given the u. S. China trade tensions, and manufacturing that seems to be leaving china and heading to Southeast Asia<\/a>, does grab have a role, is that an opportunity for you . Hooi ling what i can share is that both regions are equally looking at Southeast Asia<\/a> as huge future potential growth areas. I think everybody sees Southeast Asia<\/a> as a region of growth for the future. It is not short term, not for the next five years, it is going to be for the next few decades. That is the growth we want to help drive and lead and grow for the rest of the country. Emily we have seen many founding teams fall apart with blood on the floor. You guys seem to have a great working relationship. How do you maintain that . Hooi ling we have just had an amazing relationship because we share that foundational value system. We also share that passion and vision for what we believe we can contribute back to the region. We do know that it is unique, and hence, why we cherish and really it even more. At the same time, we also know that there are many more fortunate opportunities for other people to equally find the same passion, so we encourage it. We are helping back in the region. We have launched something called grab ventures velocity, an accelerated program to help other startups in the region who are trying to do good, trying to find scale, using our platform. Using our partnership. We are trying to help them as well because we were able to stand on the shoulders of giants and we are hoping we can give them the little boost they all deserve as well. Taylor that was grab cofounder and ceo anthony tan and hooi ling tan. Also the grab cofounder and chief operating officer. Now to a business relationship resuscitative after all but ending in 2017. Imagination Technologies Group<\/a> says it struck a new license agreement with apple. Bloomberg technologys mark gurman filled me in on thursday on why it is so significant. Mark when you are building a phone or an appletv or a watch or an ipad, this is to simplify it. There are two main types of chips that you want. You want a cpu, a main processor. A gpu, which is a graphics processor. Since 2014, apple sourced gpu designs from Imagination Technologies<\/a>. They basically put the company to death a couple of years ago when they started to design their own gpus. The companys stock price plummeted to the point where they had to sell themselves to a chinabased equity firm. Now it seems like apple wants Imagination Technologies<\/a> to come back into the fold. Whether they own some patents for key technologies that apple is not able to design itself. So they are striking a new deal with them, and it is to be seen how long this will last for. Taylor i have to ask why. Because he said in 2014, apple went to its own ship and did not use this companys chip. Now, they are going back. Is this a new vote of confidence in the company, or worries about apples own chips, or none of the above . Mark i think it is a mix. I dont think it has to do with apple worrying about its own components, they are pretty much at this point leading the industry in terms of their own inhouse chip efforts. What Imagination Technology<\/a> likely has is key patents that apple figured it is going to need to pay royalties on anyway, and it will be cheaper for them in the next few years if they just struck a longerterm royalty deal rather than pay them on an individual device basis or deal with a public spat like they did with the company a few years ago. Taylor what type of patents are we looking at, a. I. , 5g . Mark this is the latest in Computer Vision<\/a> and ar, specifically. There is a new technology called ray tracing that Imagination Technologies<\/a> is pioneering in the u. K. That helps the clarity and Processing Power<\/a> that these devices can have. But also, Imaging Technology<\/a> specific to gpus and phones. The have a lot of patents that apple could find useful. I do not think they will use any Technology Straight<\/a> from imagination. They just dont want to have to pay the big bucks that royalty fees would require. This is much simpler on their bottom line. Taylor and if they do, how soon would be start to see this technology . Are we looking at next september for 5g phones, or is this later on . Mark i dont think this has anything to do with 5g. This would be later off. This would be arrelated technology. It is possible this is stuff we will not see, he could already be and there. It is stuff that Imagination Technologies<\/a> could be threatening to take apple to court over already behindthescenes. Remember, this is not a Public Company<\/a> anymore, so a lot of this can happen under the table. So it makes sense for a number of reasons why apple would want to come to this agreement. I would be shocked if we saw any new announcements specifically related to this tech. Taylor that was bloombergs mark gurman. Coming up, will google close the gap with Amazon Web Services<\/a> and microsoft azure . Big tech predictions for 2020. That is next. This is bloomberg. Taylor from ipos to advertising, data privacy and antitrust, 2020 is sure to offer up big challenges and opportunities for the tech sector. On tuesday, i got a reading from an analyst from mkm partners. There are a lot of ifs and buts here. The way i would characterize it is there is a significant supply or a significant aging effect amongst private companies. They are staying private longer. The only way they can get to liquidity is mostly through ipos. Very few of them happen around 20 billion or 30 billion. That is one. We have a lot of those companies waiting on the sidelines. The stock market is at an alltime high. That makes the sentiment of the average joe much more positive. I am not a macro guy, but my crystal ball says that if these factors hold, we should see more ipos in the next six months, because we have elections and uncertainty around that in the second half. That is my crystal ball. We will see how things go. Taylor you have been trying to round up the sentiment from analysts on the street. It is amazon. Typically, the reason i am doing amazon, it is not in the top five. Why amazon for 2020 . I feel that there are two overarching debates on amazon. Again, on the sales side, it is consensus, it is either amazon, facebook, or google in no particular order, like choosing one of your best kids. I think it is amazon followed by facebook, followed at google. For amazon, the debate is twofold. One is they are investing a lot of money in sameday shipping. What will they return look like . I think we will see returns in the first half of this year with accelerating growth in some shape or form. Maybe investors can give them a pass on margins. The second equally important debate is can amazon hold up its market share on the cloud versus microsoft or google . That is the biggest debate. I feel over the next call it 6, 12, 18 months, what amazon has been doing with the Machine Learning<\/a>, hyper compute, mega workload that migrated the cloud, that is where amazon is doing a lot better as compared to microsoft and google. That is why im willing to bet that amazon can again step away from the crowd and continue to grow their market share. That is why i like amazon heading into 2020. Taylor taking the other two favorite children, facebook and google, i am showing where it is just total ad revenue and not ad revenue growth. But it is google and facebook clearly as number one and number two. Are those the best two poised to benefit from a constructive ad spend market . Obviously. They are the two companies that have a asymmetric mode of growth and asymmetric model share. Facebook and google both are multiheaded monsters, if you will. They have a lot of assets with more than one billion users, or active eyeballs. That is why it is hard to bet against them. But if i had to step away from either of them, i feel that among the socialmedia names, i like snapchat. Snapchat might be positioning itself as somebody who can take away a little bit of share from twitter amongst all the political advertising debates that are going on. Taylor within big tech, antitrust, data privacy, you shrug it off because the fundamentals are strong . Again, i feel the order in which we like the mega caps, amazon, facebook, and google, the regulatory headwinds each of these companies face, that is the order in which i feel that the companies would have sentiment weigh on them. Amazon the least, facebook somewhere in the middle, and google with the most. Call it the next 1224 months. That is why we rank order that way. Taylor also out with 2020 predictions was cfra Vice President<\/a> of equity research, john freeman. They include google cloud offerings, oracle undergoing a big reorganization, and facebook entering the Cloud Business<\/a>. I caught up with freeman on monday. John it is credit of application layers, he has salesforce and all the other Different Software<\/a> and other service companies. But in terms of infrastructure as a service, what amazon does, the aws, there are only three competitors in north america. There is microsoft azure, amazon aws, and google cloud. Google cloud being a relatively new entrant that went from zero and now it is an 8 billion run rate. What distinguishes these guys is they have done some pretty innovative stuff. But it is scale. Facebook, amazon, and google, operate infrastructures that are bigger than anybody else. That is their ticket to entry. My point of view is, why wouldnt they . It just makes total sense. And it would give them regulatory protection. They would be the last to enter into a market, three players, if we get a fourth. They would probably avoid a lot of regulatory scrutiny that they would get particularly if they do something in the consumer space, trying to expand their acquisition or that kind of the thing. It just seems like low hanging fruit that they could take right off the tree. Taylor you talk about the other three entrance in the market. Another one of your top calls is that googles cloud will make significant roadway into that. But how do they keep up with an amazon and a microsoft, which have dominated up until this point . John again, i think scale puts you in the game. Now, one of the things google has done is they have differentiated, particularly on the analytics and Getting Developers<\/a> to use their tenser flow framework for Machine Learning<\/a>, for a. I. , effectively. Microsoft and amazon are sort of involved in that, too. But i think that is one of the things google can do to differentiate. And tenser flow is very popular among developers. The Developer Community<\/a> is always a great indicator of what is going to be successful, what is going to be adopted. Taylor finally, you look at oracle splitting up hardware and software. John yeah, i think its time. There have been a couple of decades of acquisitions that were really targeted at the old Client Server<\/a> sort of world where you wanted to give an enterprise customer, we will give you the database, the operating system, a onestop shop Value Proposition<\/a>, and that was effective. But in the cloud world where most of these enterprises are now trying to outsource their infrastructure to, you know, google and amazon and microsoft azure, that Value Proposition<\/a> actually turns around, and i think it hurts oracle. They are not able to do deals on the database side because the Application Side<\/a> competitors get worried, and vice versa. I think there is negative synergy that they can unlock a lot of value by doing so. Taylor that was john freeman of cfra research. Coming up, it is not as easy to see the future as Companies Make<\/a> it seem. We will a look back at the decade of tech predictions for 2020. This is bloomberg. Taylor mobile phone ownership. Elon musks hyperloop. Toyotas selfdriving cars. Bitcoin. They were part of predictions of the last decade for 2020. Many did not come to fruition as i learned from bloombergs mark milian on thursday. Erickson mobility put out a report in 2014 that by 2020, there would be nine out of 10 people over the age of six with cell phones. I think they overestimated how quickly the markets would come online and how quickly cell phones would come down in price. It is a big divide to bring so many people in developing economies into the smartphone age. Taylor i want to switch over to digital. There was a prediction that jet. Com will break even. I remember being in a Shareholders Meeting<\/a> talking about jet. Com, but it looks like they are still losing money, not yet breaking even. Mark jet. Com was an independent entity, founded before uber and airbnb created the age of the unicorn. They were this early example of all the Silicon Valley<\/a> money going up in smoke. In response to the criticism, mark came on this network and said by 2020, we will be breaking even. And walmart ended up buying them the next year. But by all accounts, i dont think that really happened. Walmart is losing a lot of money in their competition with amazon right now. Taylor another of the big tech giants we talk about is google. Google, alphabet. They thought Business Revenue<\/a> would eclipse advertising revenue but we are not quite there, yet . Mark they were a little ambitious in their prediction, saying that by 2020, they would have their Cloud Business<\/a> outpace their advertising business. It is still, very much on advertising business. I think at the end of last year, advertising made up like 85 of googles revenue. So cloud has grown a lot, it is a far cry from what they envisioned, and they are bumping up against amazon, which is really dominant in that is this. Taylor what may have been the biggest bust of the year wasnt dyson, saying they would sell an electric car. I think it shut down the entire business. They could not get it off the ground. What happened with dyson . Mark that was a prediction that was not that far out. A couple of years ago, they were like, we are working on this electric car and we will have something ready by 2020. It didnt take them long to figure out, as they described, the project was not commercially viable. They spent a lot of money. It is a vacuum company that wanted to be something much larger and realized it is a complicated business. Taylor and a very high prediction, i think, a very far off prediction that may not have ever come true was uber deploying flying cars. No flying cars in our future. Mark yes. Though they still maintain that sometime in 2020, they expect to do demonstrations of these flying cars taking off and vertically landing vehicles. They do have helicopters, which are kind of like a flying car, but not really, which they are booking in new york. They hope to be able to show some type of live demonstration of the futuristic jetsonslike car. Taylor i want to end with number seven, which is toyota will make selfdriving cars. There has been a lot of competition, not only in the ev space, but also with waymo. What do we know about toyota and their selfdriving cars . Mark this was the closest to being right. They say this was back in 2015, i think, toyota came out and said, we have cars that expect to be able to drive themselves on the highway. There will be assisted technology for drivers, it doesnt mean it you will not have a driver in the front seat. And they plan to do that this year through their lexus brand, have a car that can drive itself on the highway, kind of like tesla does. It was sort of a way to cap the crazy hype cycle that took place the last decade over self driving cars. There were predictions about how we would be sitting in the backseat and have robots driving us around. We are nowhere near that day. Taylor that was bloombergs mark milian. That does it for the best of Bloomberg Technology<\/a>. We will bring you all the latest in tech throughout the week. Tune in each day at 5 00 p. M. In new york and 2 00 p. M. In san francisco. And Bloomberg Technology<\/a> is livestreaming on twitter. Check us out technology, and be sure to follow our global breaking news network at quicktake, on twitter. This is bloomberg. [chanting] stephen beijing calls this hong kongs worst crisis in the more than two decades since the 1997 handover. Hong kongs protesters have repeatedly used dangerous tools to attack police. 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