Senator ben cardin says the u. S. Needs a strategy to change north koreas calculus on its economy and security. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Im alisa parenti. This is bloomberg. Caroline im caroline hyde. This is Bloomberg Technology. Coming up, the Trump Administration unveils, quote, the biggest tax cut in u. S. History. But whats in it for tech . The fcc chairman officially out with a plans to kiln that neutrality as we know it. Ajit pai joins us for an extended interview. And a bloomberg scoop. Dropbox hits akil moscone hits a key milestone on its way to an ipo. First, the Trump Administration lays out sweeping proposals to reform the u. S. Tax system. The plan proposes to cut the Corporate Tax rate more than 1 2 to 15 , business is big and small. Cut to the also be a top tax rate. Be a 1 one time tax on moneys currently over sure overseas. Why there needs to be tax reform argentum is to make u. S. Businesses the most competitive isthe world our objective to make u. S. Business is the most competitive in the world. We have a 35 corporate rate on income and deferral. It is perhaps the most comp located and uncompetitive business rate in the world most complicated and uncompetitive business rate in the world. Not a surprise that companies leave trillions of dollars offshore. Caroline how will the Tech Industry be impacted . We are joined by lisa de simone, a professor at Stanford Graduate School of business. With us in the studio, tom giles. Lisa, i want to kick it off with you. You have been working with Tech Companies. You have been looking at the impact of potential tax reforms. Will this help tech giants . Lisa absolutely. I dont think there is a question. Lowering the Corporate Tax rate is one of the biggest cuts in history ever. Leaving more profits in the hands of companies. Im sure they are going to be happier, and im sure the administration also hopes that, with that extra money, they will invest more, whether its in innovation, research development, tangible, fixed assets, or even human capital, increasing the number of jobs we have here in the u. S. Caroline certainly, tom, looking at the 2. 6 trillion of cash held overseas, tech is a large holder of it. Tom the biggest the companies with the most cash overseas, alphabet, apple, microsoft, oracle. The list goes on. These are the companies that are poised to benefit the most. My question for lisa and the people we have talked to, including corporate ceos they have said rather than putting money into r d, rather than bringing manufacturing from abroad to the u. S. , what they plan to do with this is buybacks, dividends, m a, and possibly paying executives more money. So, my question is, what does that do for rmb r d . What was that what does that do for innovation . Caroline since the date we saw the new president come in, november 9, we have seen Internet TechnologyCompanies Perform the best, up 15. 3 in terms of total returns. The anticipation is huge of what money could be brought back and how it could be better served for investors. What about consumers . What about r d . The the tech come lisa Tech Companies would argue everybody benefits. They are potentially investing in lowerreturn acquisitions or just sitting in cash. They can bring it back home, put it in the hands of shareholders, who can then go out and buy or invest in other companies. Thats the way we will see this innovation. The Tech Companies would be happy to be able to redeploy their capital in the most efficient way. The administration appears to be trusting the Tech Companies will do that as a result of this change. Caroline weve talked about giants, but what about the . Maller companies will this help smaller and mediumsized entities as well . Lisa they are probably less affected by the change in our International Tax system on the but they will still get the benefit of the big rate cut. That flows through to not only the companies that have organized themselves as c corporations, but a wide variety of legal forms that are more commonly used by the small and midsized businesses. We are getting the benefit of that big rate cut that they would not have gotten under the previous tax regime. Caroline its fascinating. Prior to this repatriation some rathere creative ways that certain tech ,iants were using tax loopholes using tax havens, for example. Do we think that might come to a bit of an end . Tom you still have an incentive to have low tax rates overseas. You are still subject to whatever tax scheme is in that theyry, especially as moved to a more territorial system. You are still subject to the taxes in that region where you have a receipt. You do have an incentive to keep it there. You wouldnt have that same 35 tax here. That would remove that obstacle. To the point about the smaller to mid sized companies, if you believe that cash brought from overseas is going to be used on m a, that would benefit the smaller to Midsized Companies that could potentially become takeout targets. My question again, getting back to this, what happens with the money when it comes back the Trump Administration has talked about wanting this to be a way of bringing manufacturing to the u. S. , creating jobs. But if what youre doing is paying dividends and buybacks, does that really create jobs . Does that end up in the coffers of wealthy individuals and investors, or does it end up getting plowed back into the economy . Thats going to vary from person to person or company to company. There is a big question about that. Caroline lisa, youve talked about how you think money will be more efficiently deployed. Its fascinating. Theres a call for more jobs, but automation is one of the key killers of jobs. Have you got a sense of whether this will benefit the economy of a whole as tom was talking about there . Lisa i do think it will benefit the economy as a whole. Back afocus is to bring certain type of job to the u. S. , manufacturing jobs, for example thats a nontax issue. That is something that needs to potentially be addressed through other types of policies. Education being a big deterrent to people moving from manufacturing jobs towards the types of jobs that are available here, like automation. Somebody has to program the software and provide maintenance for all of these robots were going to be providing the manufacturing that used to be provided by humans. Thats the shift i think we need to make, because i dont think we are going to be able to compete on the wages that are being offered by other parts of the world. Thats not a tax play. That is something different. Caroline to that theme that you just mentioned, weve been talking a lot about the repatriation and the money that we might see brought back because of this one time tax holiday, but what about border taxes that have been so talked about . What about exporters vs. Importers . Are there particular companies that might be worried about what they what will happen when they want to import pieces of equipment they need to use . Lisa absolutely. I think that is still the big open question mark that we did not get a lot of answers on today. We are talking about moving towards a territorial tax system, where the United States companies are just going to be taxed on their Business Activities in the u. S. The question is how you define that. Until this point, it has been based on where the profits are produced, where the Economic Activity is being done, the rnd, the marketing, all those things the r d, the marketing, all those things. Now, they are changing the definition to where the product is sold. That will help exporters and hurt importers, who arent going to be able to take the deduction for imported components. Thats going to hurt them. These other companies that are potentially providing those jobs that we want so badly. There are definitely winners and losers, and i think thats why we still dont have an answer on the border adjustment tax. Caroline some answers, still many more questions. Lisa de simone, professor. And Bloomberg Technologys tom giles. Now, a revolving door in tech. A prominent venture capitalist says he is retiring from investing. He was an early backer of twitter, instagram, uber, and several other companies, both as an individual investor and through his firm. He could clarified he clarified that lowercase will not raise more money from investors, but will continue to support its current portfolio of companies. Coming up, one of those original sacca investors, twitter. Shares soared after reports that consumer that user growth this is bloomberg. Caroline twitter finally seems to be addressing its biggest challenge attracting new users. The social network reported that average monthly active users rose 6 in the First Quarter compared to the same period last year. S growth comes as twister twitter posted a yearoveryear drop in quarterly revenue. Joining us for a deep dive on whether twitters user growth will boost ad sales, Melissa Parrish in new york and bloomberg editor at large cory johnson. Melissa, out to you first. Im looking at whether these numbers are going to be encouraging enough, 6 uptick in users. Is that the trump effect . Whats behind all of this . Melissa the trump effect i guess we have all been talking about that a lot. To some degree, its a bit of a trump effect, but its largely more about seeing the name twitter in the press, more than it is growth being directly attributed to the president. The name has been associated with Current Events more and more and more, especially in this last quarter. Sure, i think we can attribute some of it to the political and Current Events that have been taking place and the conversation around that. Caroline cory, whether its trump or not, does this lure advertisers to spend more . Cory we know the answer to that. The answer is no. User growth, great. 4 sequentially yearoveryear. The user growth has been pathetic all the way back to the ipo. Yearser growth over 3 1 2 s. That is not a big growth business. Its better than it has been. It still stinks. It is still on a small base compared to facebook, instagram. Those user numbers are pretty weak. When you add to that their ability to monetize with all the data they said they were going to get about users, with all the ways they were going to find the poll numbers out of that, what is the revenue base . How fast is the revenue base growing . The revenues were weak, down on a yearoveryear basis for the first time ever. The value of a twitter user is going down a lot. How much they can charge for each user is getting worse and worse. They cant blame it on international. International is still about 79 of the users. Advertisers just are not willing to pay to reach twitter users, and thats a real problem for this business. Caroline to corys point, there was a great quote in the bloomberg story, saying when facebook grows at four twitters per year, that tells you there is something really wrong here. Is there something really wrong, or are we seeing a bit of a change in how they are going to be charging . Will revenue eventually pick up . Melissa im a marketing analyst, rather than a financial analyst. When i look at it, its true. Revenues have been declining, and thats scary. They are doing things that will be more appealing, that will make them more appealing to advertisers in the future. They are doing some hygiene, ettinger rid of some products they know dont work. Getting rid of some products that they know dont work. They are cleaning up some measurements. These are small things, admittedly, but it looks like they are going in the right direction. Are substantial changes really needed . Yes, i think so, both in terms of the core product and the ad products. I think we need to see some real innovation rather than some of the incremental changes. From my perspective, the moves they are putting in place should make them a bit more palatable to advertisers in the future. Cory these minor changes a bit more, i would agree. Its not quite lipstick on a pig, but a bit more, incremental changes what is the dollar amount . 1. 67 this year for quarter. That number should not be going down. They should be earning learning more and more about their users, find better ways to use data, have closer relationships with their advertisers. When you look at the value of a twitter user on the dollar basis, going from 1. 92 a year ago to 1. 67 in the quarter the announced today, thats the wrong direction. Maybe its because they cleaned something up getting rid of some advertising vehicles that they didnt want to have around anymore, but losing the nfl contract seeing these numbers go down in all the wrong places, its a real concern. The stock was up today, but its way down from where it was, because what twitter could someday be its becoming clear twitter is what it is. Caroline the shares are still lagging near a record low for twitter. Last question. You talk about the cleanup and video would be less to charge for than other ways of video. What do marketers really want to see . What could twitter due to really start to lure in the advertising bucks and make each of us who are on twitter more valuable to the company . Melissa data is a big play. They are making some big moves in their platform, cleaning it up. I think they will be able to monetize that cleaned up, more hygienic, more accessible datastream. That doesnt solve the ad revenue problem. I think we need to see some really robust, new ad products. Its not going to be about autoplay video. Its a nice move to see, but i dont think that is the end game for twitter, if they are really trying to be profitable in the long term. I think its something we havent seen yet. I wish i had a good idea. I would happily share it. I think its going to be some it will need to be some new products that we just havent seen yet, or else they are just going to continue to lumber along the way they have. Melissa parrish, great to have you on. Bloomberg editor at large and the birthday boy in the house, cory johnson. Give him some twitter love. He may be casting aspersions on the company, but you are great on twitter. Cory much love for twitter. Caroline paypal shares popping in afterhours trading. Investors are starting to embrace the companys strategy of converting the online payment platform into a digital wallet. The ceos strategy is working as the Company Raised its annual forecast. Joining us tomorrow is paypals cfo. Coming up, googles Parent Company is set to report earnings thursday. The numbers wall street will be focused on explained. We would like to bring to your attention, our interactive tv function. On the at tv bloomberg. Watch us live and see previous interviews. You can become part of the conversation by sending us instant messages during our shows. This is for bloomberg subscribers only. This is bloomberg. Caroline espn will cut about 100 staffers this week in an effort to save money. Thats according to a person familiar with the matter, who says the leader in sports tv is coping with rising costs and fewer subscribers. Theespn president says disneyowned network is determining who to cut from the current payroll. Also out with earnings thursday, googles parent, alphabet. It closed at a record high in the days trading. By anmpanys been hit advertising controversy, with some Companies Withholding spending, citing concerns about videos their ads ran alongside. Julie alphabet closing at a record high, one day before it is set to release earnings. The company was hit by youtube advertising controversy as companies at one point halted spending, citing concern that their ads would run alongside offensive videos. Lets to get look at alphabet. Its Google Division dominates the digital ad industry along with facebook. Google owns about 40 of the market. Together, they own about 60 . A lot of people call them a duopoly. Google advertising makes up about 86 of alphabets revenues, a big chunk. Advertising, the white line, above and beyond, higher than the others. Properties like youtube and Google Search have played a major role in the rise of digital advertising. When combined, internet ads on mobile, the orange bars, and videos him of the blue bars, are set to surpass and videos, the blue bars, are set to surpass tv advertising. The spread gets wider. Outside this category, but increasing conservation from Cloud Services should continue to support alphabets Revenue Growth in the First Quarter. The group has seen a surge. By earnings. Rised each year since 2012, alphabet has missed consensus Sales Estimates in the First Quarter. While analysts dont expect the recent advertising controversy to affect the results, they will be watching for comments on how executives are solving that issue. We will be following alphabet pasta earnings alphabets earnings after they are released. Caroline that was bloombergs scarlet fu earlier. Paing up, fcc chairman ajit calls for a review of Net Neutrality. Defenders vow a tsunami of resistance. Well hear from chairman pai. If you like bloomberg news, check us out on the radio. You can listen on the Bloomberg App and in the u. S. On sirius xm. This is bloomberg. Alisa im alisa parenti, and you are watching Bloomberg Technology. The Trump Administration has announced what it is calling the biggest tax cut in u. S. History. The plan cuts the top income tax rate from 39. 6 to 35 and reduces the number of personal income tax brackets. The new tax rates would be 10 , 25 , and 35 . French president ial candidate Emmanuel Macron was booed in his hometown after an ambush by rival <