Transcripts For BLOOMBERG Bloomberg Technology 20240712 : vi

BLOOMBERG Bloomberg Technology July 12, 2024

Netflix shares also in the red. I spoke with Reed Hastings for his thoughts on how the pandemic would affect the industry and how he sees the streaming wars playing out. First, a deep dive into what is moving after hours. Slack moving after the bell. Shares plummeting after filling fell short of analyst estimates. Abigail doolittle has been looking at the numbers. I just got off the phone with the ceo of slack, who focused on the demand they see accelerating in paid customers. They are still not seeing still not giving guidance. Afterch a dramatic impact hours . Abigail one thing investors do not like is uncertainty. Also, in terms of the billings miss for the quarter, it was not huge, but 6 . You would think that folks would be using the messaging platform during the stayathome days, but it signals the idea that some of the small and mediumsized businesses are hurt enough, signaling that slack could be a nice to have Technology Rather than a need to have. This stock really getting plunged in the after hours. The idea that there is more uncertainty signals that there could be more weakness. Investors do not like uncertainty. That is true on the day. The nasdaq now in an official correction within three days. Interestingly, the nasdaq is also down. Perhaps a signal that the selling pressure could abate. , down on the know they will not be included in the s p 500. Bid orpetitor got the the partnership with gm. Emily abigail doolittle, thank you so much for that update. We will continue to follow the selloff. From tiktokeek away potentially being banned in the united states. That is unless there is a deal with a u. S. Company, like microsoft or walmart. Michael, obviously tiktok is in and hasof the storm taken the world by storm. This geopolitical tugofwar impacted growth and how will it impact future growth . It is something that is beloved by over 100 million americans who use the app all the time. Our User Engagement numbers are incredible. We just created a billiondollar creator fund in the united states. The content on the platform is fun, it is joyful. We are doing great and people are loving it. Emily i know you cannot tell us the exact timeline of where you are in a deal but we are a week away from the governments deadline. Whatcan you tell us about tiktok is looking for in a deal . Michael we are optimistic. Creators is on our come our community, and our employees. We have employees in a lot of states that typically do not have tech jobs. We plan on hiring another 10,000 employees over the next three years. Our focus is still on the growth and community. Parts of the u. S. Business is up for sale . Is it just the users, or the algorithm which is considered to be really the crown jewels . Theael i cant speak to specifics of the deal but the reason there is so much interest in the company is because we have been successful in growing and bringing joy to so Many Americans in difficult times. One thing people have not focused on too much is the impact on the economy and Small Businesses. Many Small Businesses coming to the platform to reach more customers. We are hearing stories from businesses using the platform to and during uncertain difficult economic times. Emily are you concerned about the Economic Impact if the president does succeed in banning the platform, if a deal is not done . I am an optimist. As i mentioned, we remain optimistic. The worst Case Scenario would be unfortunate for 100 million plus americans who love the platform and use it everyday. The employees and future employees and so many states across the country. There would be a major impact. But, again, focusing on the positive and what is best for our community. Emily that said, there are a lot of questions about what to talk and about what tiktok and bytedances relationship with the Chinese Government actually is. Will tryse government to exert some influence over the deal, and how do you balance two opposing governments . Michael we certainly find ourselves in interesting geopolitical times. The situation with the u. S. And china, the Global Economy where we sit today, is a complicated one. As a private company just trying to bring entertainment content. Tiktok is not available in china. We are trying to focus on the creators and users. But certainly, the Macro Economic and macro Political Climate is a challenging one at the moment. Emily i know you are involved tiktoks transparency and Accountability Center. There are criticisms that it does not play to the best parts of our humanity. What are your priorities especially going into what is bound to be a contentious u. S. Election . Michael Many Technology companies, Internet Companies have been criticized over the past few years of not being transparent and accountable. We are looking to go a step forward. That is why we created this transparency and Accountability Center where we have government officials we plan on ringing in policymakers and showing an unprecedented behind the scenes look for the algorithm, how the source code works, how content goes on the platform, what we are removing, cybersecurity practices, all of those things that lawmakers are interested in. We want to set the standard for transparency and accountability for all platforms. Emily tiktok users were part of a plot that basically sabotaged one of president trumps rallies in tulsa, oklahoma. What are you doing to combat that . Said thathe president was not a factor, but that aside, tiktok is more for entertainment. Ads. Not allow political our content moderation teams work vigorously, vigilant every andin removing mis disinformation, whether it is on covid or election disinformation. We want to be transparent. We have released transparent reports. We have another one coming up ande we will have mis disinformation about the virus. We have been working with the department of Homeland Security to make sure there is no for an on the platform or misinformation about the election. Emily challenging what the administration is trying to do. Could this all change if biden wins the election . Could that throw this all for a loop . What are the chances that tiktok doesnt have to do anything, no ban and no deal either . Michael i cant speak to our legal strategy. We are working with the government on this and it is not something we are viewing in a political way. Emily thank you for taking time out of the noise of this deal. Off ourp, kicking Education Technology series. We will hear from the founder of khan academy on the current state of Remote School across the country. Improves trying to their Remote Learning experience. This is bloomberg. Emily we have got some breaking news. Northrop grumman has gotten a long anticipated air force contract valued at 13 billion to proceed into full development of the next intercontinental ballistic for the united states. Theously, a huge win for defense contractor. Winning arumman contract from the air force to develop into continental ballistic missiles. We will continue to bring you headlines on that as we have them. I want to turn to our special ,eries on Education Technology the virtual classroom. Currentooking at the state of technology. From deconh sal khan academy. I started off by asking him about a new initiative he is working on which offers live tutoring for about students. Sal this has been a dream of mine for a long time. Connie kata me can help Children Academy allows students to learn at their own pace. The idea is to have that and in person synchronous sessions. Ideally in a classroom but if you cant get in a classroom, on videoconference. Hit last spring and we saw huge variation of how. Ill School Systems were able that is when i started talking to volunteers, saying we need to build something where we can with kids who need help those willing to give that help. It is separate from khan academy. I hope these merge in the future. It is a separate project, volunteer driven. We have capacity for a few thousand more students. For anyone listening or who you know might benefit from it. We are doing High School Math right now. I want everyone to register. Emily a lot of things have to go right for this to really work. You have also said this could lead to an education catastrophe. Sal we are still early in the school year but the catastrophe scenario is not that far off. We have 20 , 30 of the population that does not have sufficient internet access. School districts have been doing a good job getting laptops out. 5 , 10 n we are seeing of the population is not engaged for whatever reason. Maybe they dont have enough devices at home. We dont know. That 5 or 10 , they were already the kids who were disproportionately now if they are not being reached for six months, one year, not only will they not learn during that time period, they will atrophy. It will be really bad for their mental health. School is most his lifeline to socialization, friendship. If these kids are disconnected, i worry about what will happen. It,y if you could quantify do you think this will be a lost year, quote unquote for many children. If so, how many children . ,al in the coming year middleclass, upper middleclass children will probably do fine. There may even be some silver arengs where their parents offering them extra support. I would say 20 , 30 of the population, it will be a difficult scenario. They may not have the resources. That is already the group that might have already been struggling. Year of this. Rolling one and two months crises, but the reality is we are six months into it. There is even some chance this goes into the next school year. Emily my mom is a teacher who is teaching remotely this fall. She asked me to ask you, what is the best way for teachers to bond with their students if they are about . If they are remote . Sal in a normal scenario, teachers have a lot of pressure, they have school days to cover those standards. This is a scenario where teachers have to do essentially double duty. They always have to do double duty to some degree. They not only have to cover the standards, they have to make sure the kids are feeling supported emotionally, where they have outlets to have fun. When you get on that videoconference together, it is completely ok for the first five minutes to be fun. Every 20 minutes or so, have another moment where it can be fun conversation. You might not cover all of the standards. If you get reasonable coverage of the standards and kids dont atrophy their skills. I think this is good for the teachers as well. Emily what about screen time . We have been in this almost six months. I definitely notice my son, trying to get him out of the house is a little bit harder. How concerned are you about prolonged exposure to screens . Or we just accept that this is how it has to be for this year at least and not worry about it . Sal the answer is somewhere in between. Isiously, screen time peoples lifeline to learning. If they try to replicate a school day on videoconference, that is too much screen time not only for kids, that is too much for us. Anyone who sent in a two hour meeting on a videoconference needs to go for a walk. Get, if they are able to two, three hours, that is more than enough. Just as much outdoor time as possible. Sal khan, founder of khan academy. You can get more throughout the week. Later this hour, we will hear from the Program Manager for google classroom and talk about how the platform is seeing a huge surge in demand around the world. As we have been reporting company selloffs in tech shares all leapt up steam today. One of the main beneficiaries of the faang runup has been netflix. Over the past two decades, netflix has survived and thrived and become one of the top tech and Entertainment Companies in the world. I talked with the cofounder and ceo, Reed Hastings. And coceo, Reed Hastings. He is out with a new book. Is reallyculture geared around flexibility instead of efficiency. We have very few rules. We are very inventive. We are on the edge of chaos. That happens sometimes. But that helps you adjust. Adjustmento a lot of , coming from dvd by mail, then doing streaming, to then figure out how to break into original series, then original movie, how to expand around the world. Now, about two thirds of our members are not in the u. S. Big successful expansion to building our studio. Really due to the culture, both attracting incredible people and being very flexible so we did not stay really focused on the dvd by mail business. Emily how is the pandemic changing the way you run a business, when so many people are working from home . Jack dorsey said some people can work from home forever. Want we definitely employees to be productive. I think for most of us, we want to get back into the office, have given contact have human contact, discussion and debates. The technology is good but not yet the same as being in person. I am sure more companies will have more people spending their days from home. The human contact and interaction, it is great to be in person. Emily do you think that working from home forever is an overreaction . Reed there are Different Companies and different cultures. Im sure there are some that will do that. It will be great for them to try that. At netflix, we are a human company. We want to have interaction. It would be better to have that be in person than only virtual. Emily one thing i still dont quite get is how you get through a day, sometimes months without making a decision. When is the last time you made a big decision . Ago, i madea month a big decision to promote ted sorrento ted serrandos to coceo with me. We had been acting as coceos anyway. We wanted to give him the recognition and platform of really is existing role. I try not to make decisions about particular titles, product features, marketing campaigns. Coach tryingas the to stimulate good thinking. Emily when it comes to ted, coceo arrangements are highly unusual and often do not work. Why do you think this will work . Ond it is really dependent the two people. When you think of every family, ceos are typically two running the family. You just have to be really close. Ted and i have been together for more than 20 years. With the two of us, totally confident it will work right. Emily the pandemic has played netflixs hands. That said, production has come to a halt, projects are backing up. Im not complaining but it is a little bit harder to find something new to watch every night. How do you think the Entertainment Industry is different after this . Reed it is a challenge with production particularly in the u. S. In europe, we are able to go back to production and parts of asia. That will have an effect more next year than this year, not only for us but for our competitors also. Everyone is figuring out how to make it work, just like if there is a Writers Strike or other things that have happened over the last 50 years. In the long term, i think covid the 1918, kind of like pandemic we read about today. Emily more of my conversation with netflix coceo Reed Hastings, next. This is bloomberg. The big events are back. Xfinity is your home for the return of live sports. You can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save 400 a year on your wireless bill. Plus, get 400 off when you buy the new Samsung Galaxy note20 ultra 5g. Back now to our top story of the moment. The continued tumble in tech stocks. Shares of tesla following 21 . Electric carmaker was expected to be named to the s p 500 on friday, but it did not happen. The decision may have rested on questions of teslas profitability metrics. After that, g. M. s 2 milliondollar equity stake in nikola just announced. We are joined by david. What is driving the selloff . David tesla was expected to become part of the s p 500. It was widely anticipated. You would have all these passive inflows from s p index funds. 4. 5 trillion funds would potentially be adding tesla. When it did not happen, a lot of the enthusiasm went out the window and the share price went tumbling down. There were some other factors. One is you had General Motors and nikola, and electric vehicle start up joining forces. Gm taking a stake in the company and helping get its Hydrogen Powered trucks and pickup trucks to market sooner. Part supplier network, that is a big shot in the arm for a company like nikola. That hurt the shares as well. Have an analyst expecting an analyst expecting part of the isay on the s p standpoint when they reviewed tesla, the company has had several consecutive profitable quarters. The problem is they do not make money selling profitable selling electric vehicles. It has always made up for the losses of selling cars. It is not great quality of earnings. It does lead to some volatility in the share price. You have all these factors on top of each other. It is just a big selloff. Emily lets talk about netflixs future, the uncertainty about profitability, the uncertainty about metrics in general. Do you think some of those longerterm issues are weighing on investors outlooks here . David it is. One of the issues with electric vehicles is even though they capture the imagination of the car buying public to a certain degree and have absolutely capture the imagination of investors, the profit picture is not that great. Nobody makes money on them at the moment except tesla. Again, it is a company that has made a profit on the whole but not strictly on its electric vehicle business. There a lot of costs that go into these vehicles that are going to take a while to break down. Batteries are still expensive. You will need to get to some advanced batteries to get the cost of an electric vehicle in line wit

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