Good Tuesday Morning welcome to squawk alley im Carl Quintanilla with morgan brennan. The market is down about 100 points starting with the apple special event set to kick off from the steve jobs theater in cupertino in just under two hours. Josh lipton is there live and joins us with what analysts and investors and reviewers are expecting. Hey, josh. Reporter so, carl, apples biggest day of the year just about to kick off here right behind me at the steve jobs theater. As you mentioned, analysts think they have a good beat on what is coming theyre looking for three new iphones. Faster processor and improved camera and maybe stronger waterproofing and shatter resistance big question for investors is pricing. What is tim cook going to charge for the new model. Ive talked to some analysts who think he will keep pricing basically constant no big change from the kusht lineup which starts at roughly 750 and 1,100 and expectations are muted on the street. Checked in with gene munster and what does he though total iphone will do in the Holiday Quarter and they are looking for 63. 5 million and that is a dip of 1 yearoveryear now in addition to iphones, focus on the wearables were looking for a new watch. Wearables have been a bright spot for this company. Even as the iphone franchise has been under pressure. Apple has sold an estimated 80 million watches now and 50 millionaire pods if you combine wearables and serves according to apple youre approaching the size of a fortune 50 company and speaking of those services it is six months since apple unveiled the new ones and investors still have plenty of questions about apple tv plus, what will they charge you for that service they are considering 10 a month on available and dont sleep on the Gaming Service analysts will tell you there are 1. 5 billion people playing cell phone games so a potential big opportunity. What else might we see in maybe noise canceling air pods or maybe a new apple tv with a faster processor, well timed given the new services and perhaps news on the new macbook pro. Stick with us and lets bring in editor and chief of the verge mella vettel. Who is also onsite. Good morning. Good morning. Let me start with an argument because that is fun with you i would argue that better cameras dont sell iphones Network Upgrades and bigger screens sell iphones so this whole exercise today for investors, take it or leave it yeah, i think the real answer here is in the names last year you had the iphone xr and the x max and this year youll see the 11. Then youll see an 11 pro and 11 pro max. A big question i have is how they differentiate the pro models, if that is what they do, how they differentiate between just it has a third camera which is what the big rumor is and if the iphone 11 is the default iphone, the one they are expecting you to get the real question becomes how many of those services and accessories could they attach. You buy an iphone 11 at a lower asp, will you buy air pods or apple watch or the entire suite of services. I expect to hear about the game service today. That is a interesting play for apple as they kick off consumer marketing it is differentiated compared to the tv service where there is still a lot of question parks. To that point, it is increasingly all about that installed base and leveraging that do you think maybe and even month so than previous september events that weve seen from apple, do you think that the services, do you think that the ecosystem and what the devices could enable in terms of a install base is the biggest focus here today i think they know they have a really sticky installed base as long as were talking to customers in the u. S. , youre not going to leave imessage weve talked about this so many times. You wont leave imessage and stay with the blue bubbles but they have to convince you that the other services are worth it but the goal is a unified vision of what living in the ios vision looks like were stuck in it. And it is good but it could get better but there are some things on the camera as you brought up, googles camera is kind of better samsung camera is good they have to make a big play to say this is they are not outselling the iphone good cameras, they only go so far. Yeah, on the iphone yeah they absolutely only get you so far. It is the ecosystem that keeps you in but they want to beat them on the tech specs too so the balance of we know we got you. Here is more stuff just buy it versus you are the leader and you feel good about the restrictions of this ecosystem. That is the balance they have to strike so nelay, when the journal said they have to emphasize accessories, even though the percentage of overall revenue for the nine months of the year so far that is iphone is down 15 . What is more important right now . I dont think anything is more important than iphone i dont think the huge yearoveryear sales gains will appear they dont have any more markets to unlock, no more giant Chinese Market and market carriers for them but if you listen to tim cook we have to make upgrades and tradeins easier so all of the people still happy with the 6s or the headphone jack and present a compelling case to upgrade and buy the air pods and apple watch and sign up for apple music. It is a lot of stuff to buy if you are happy with your iphone and iphones, and ios 13 is not different than the previous versions of ios. They have to make a sale about all of the things you could do otherwise people will just hold tight. Josh, and i realize were still two hours out from the event and youve covered a number of these over the years what does it feel like and what is the sentiment on the ground and how does it compare to previous events . Listen, morgan, at the events you could expect tim cook to take the stage with Jeff Williams and Phil Schiller to bring enthusiasm and excitement to the eent. Youll hear the theater there being live streamed and apple employees. So clearly were at the steve jobs theater here in cupertino, california so the excitement is there well see how investors and consumers react. Like i said, expectations are muted. But on the other hand, there are analysts who say there is still at a lot of people on old iphones, estimated 200 iphone 6er earlier that is potentially a lot of people who may think about upgrading to the faster processor and improved camera system well find out. And once again i would argue and neil im trying to start an argument with you and you are not playing with me such a troublemaker. I like to make trouble. Today doesnt really matter as long as apple doesnt screw it up because next year well get a 5g Network Upgrade with the phone and we havent had that since the iphone 5 in 2012 and that could move the needle if they improve capability and software to take advantage of 5g and if they dont screw this up and tell a story about new cameras and services and tread water, that is fine. Yeah, if you want to argue with me, i dont think it is fine i dont think apple could risk their position they cant take a step back. And it is a bunch of new cameras and expensive, they wont track the number of switchers or upgraders they need and they need to keep the upgrade rate high in order to maintain numbers and position but youre right, theyre taking a sort of year delay versus the samsung and lg and one plus of the world to put out a 5g phone. I think that is phone. The networks are far but ready verizon are announcing we have nfl stadiums it just certain areas of an nfl stadium. They cant even get that much range so the networks are not ready so if apple could hit the big Network Deployment moment with the 5g iphone those are two upgrades that will make it to pay extra for the 5g and get a new phone to address that network. That is a compelling upgrade you are right there. But they cannot take their eye off the ball or iphone 7 this one and put out a phone with the same but a different color theyve got to deliver on a vision here. Especially if they want the Service Rates to go up. I like that iphone 7 as a verb thank you. We still have more to come on apple roger macannie weighs in his expectations and next North Carolina state attorney general josh stein on the antitrust investigation into both google and facebook we have a big show of squawk alley continuing after this break. Dow is down 73 tech stocks are selling off. Stay with us. Improve our workflow. Attract new customers. Thats when fastsigns recommended fleet graphics. Yeah, and now business is rolling in. Get started at fastsigns. Com. Welcome back to squawk alley. Two antitrust investigations under way. 50 states attorney generals launching a probe no google and separately a multistate investigation into facebook as well being led by new york joining us now is one of the state a. G. s involved in both google and facebook probes josh stein of North Carolina. Mr. Attorney general, thanks for joining us today. It is a pleasure to be with you. Thanks for having me. I want to start with google here because certainly advertising practices have been a source of consternation from a number of companies over the years it has been looked at by regulators over the years for that business. And even google comes out and said weve answered many questions on issues in the u. S. And overseas and this is not new for us but it is new for you in a sense. Why now . Why are you looking to probe this business now. Well, thanks. Think how important the internet is to your and my lives. How we communicate with family and friends and how we do our work or conduct business its how we watch tv, sports, get the news it really is the Critical Infrastructure of the 21st century and it is hard to imagine back 20 years ago when it hardly even existed it was just in the absolute infancy. And where we are today, none of us could have possibly imagined. But now we have massive Big Tech Companies with dominance in the markets and they have the ability to really squelch the innovation that weve all benefited so much from through the internet and that is really what were looking at with google and with facebook is to make sure that these massive Market Players and dominant actors are not misusing their power in order to harm consumers and squelch competition. So the president of microsoft brad smith was on cnbc earlier today and one of the things that he talked about in light of the microsoft antitrust woes that took place years ago was that that situation for that company lasted 29 years but still less time than it took for ibm or at t what is your timeline for these investigations, whether it is google or whether it is facebook and are you prepared for it to last for decades well, we surely hope it does not require decades. And i will frankly say that an outgrowth of the microsoft investigation was the creation of google. Because microsoft was in some ways constrained, google saw a Market Opportunity and came into the world and offered their product which so many people benefit from so the whole purpose is when you do the investigation, hopefully in a timely fashion, none of us want this to go on for decades, in a timely fashion reach some resolution should that be the appropriate outcome. Yeah, i think some would disagree about what set google up to succeed. But i wonder what your focus is . Is it on consumer harm from these companies or is it more on suppression of innovation because it seems like those are different standards, consumer harm perhaps having to do more with pricing action and how much people have to pay suppression of competition having more to do with whether theyre using their monopoly to unfairly gain advantage over other service providers. And theyre not mutually exclusive. And consumer harm could be more than just the prices you pay although if google were manipulating the advertising power to raise the prices that consumers pay, then there is consumer harm and in regard to prices but we also in terms of the services that are available to us and the quality of those services, do these companies that have such market dominant positions adequately value our privacy . Are they safeguarding our information to the same extent they would if there were real competitors in the market against them so there are other ways to evaluate consumer harm and it related it suppressing competition, that also has an impact on consumers. Because there is a whole wave of possible new businesses out there that want to take the internet in directions that none of us can even imagine that could make our lives better but if they are strangled on the vine, if they never even come to fruition, then all of that opportunity, growth and value is denied to consumers, denied to the people of North Carolina and that is a real concern to the people of North Carolina. So with that in mind, i wonder, is there a fine large enough to satisfy this group of a. G. s because these companies revenues are enormous. It is hard to imagine them feeling that pain unless you get a change if Business Practices is that what you are after there is a range of possible remedies, depending on what the investigation concludes. But i think it really is premature to talk about what the appropriate remedy is, whether it is a fine or its some other type of remedy, relief, until weve done the investigation we have just want to start this work, wanted people to know that were gravely concerned and were beginning this work but lets do the investigation, see what the evidence shows and then go where it leads us North Carolina attorney general josh stein, thanks for joining us today it was my pleasure. Thank you. And coming up, it has been 20 years of alibaba and it is most visible cofounder jack a a is stepping down today what do the next 20 look like without him at the helm. And later the exclusive with the head of google cloud in the first ever broadcast appearance all ahead in just few a minutes. Stay with us at Southern New Hampshire university, we believe in education built for all people. [woman] snhu was the best experience of my life. [man] without snhu, i wouldnt be the leader i am today. [woman] i graduated high school 19 years ago. I still finished. [man] in the military, you feel that sense of accomplishment. Thats what snhu is. You will march from this arena and say to the world. I did it. [woman] you did it. I love you. [graduate] i love you too. Woi felt completely helpless. Hed online. My entire career and business were in jeopardy. I called reputation defender. Vo take control of your online reputation. Get your free reputation report card at reputationdefender. Com. Find out your online reputation today and let the experts help you repair it. Woman they were able to restore my good name. Vo visit reputationdefender. Com or call 18778668555. Welcome back is elon musk asleep at the wheel when it comes to the tesla energy business. This is the narrative from wall street but the growth from the Energy Storage business has some analysts changing their tune phil lebeau is in norwich with the story. Reporter and certainly when it comes to solar city, there are very few who believe that business is being run well given the recent results but when it comes to Energy Storage, tesla in the Second Quarter showed growth of 81 in terms of megawatts installed. We went up to battleboro vermont and the cappy family have two tesla power walls installed in the cellar of their home this is allowing them not to deal with blackouts whenever they happen up in the area and allow Green Mountain power which is the local utility to draw energy off of their power walls whenever theyre needed in that area in fact, the Power Company said the growth in demand for the power walls and Energy Storage is something that theyre looking to expand in the future. With the amount of solar coming on in the region, and in vermont they really do provide a Grid Stability resource. So they really help you orchestrate the energy on this system in a way that is very Cost Effective as well as incredibly reliable. Not just at the home level but at the grid level. Reporter for tesla as a company, energy is still a small component in terms of Revenue Generating just 5. 7 of the companys revenue in the Second Quarter. Analysts look at Energy Storage and say it is a nice business but there are limited opportunities for growth. Tesla has a great electric car business they need all of the batteries they can possibly get. Especially if theyre going to do the pickup truck and the semi so i dont quite understand why it is that they are that they are in the business of trying to do stationary storage. Reporter tesla Still Believes in stationary storage these are some of the power packs here at the solar farm in norwich, connecticut there are 30 power packs here. They have enough power to generator cover and run about 700 homes a year and tesla believes this is just a start of what it can do in the future in terms of commanding its Energy Storage business. Phil, not to change the topic too much, but there are so much discussion about the frank ford auto show and the way europeans are getting into electric. Weve seen musk try to troll porsche in the past week what is the sense of what theyll face in the year ahead reporter i think it is not a whole lot in the year ahead. Porsche is probably the biggest threat and that is on the very upper end. Look, volkswagen said it will have more electric vehicles as do other automakers but those are plans at this point. It is not like youll see a rush of electric vehicles coming in the next 12 months and that is why when you look at analysts and theyre asked continually what is the biggest threat to tess le, they dont see it on the horizon. Maybe three or four years down the road but not within the next 12 months. A lot of angles to consider on that name phil, we know youll cover them all. Phil le bebeau on tesla. When can he come back, jonathan mcniemi