tv Bloomberg Technology Bloomberg August 14, 2017 11:00pm-12:00am EDT
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>> you are watching "bloomberg technology." fighting french police. and eight-year-old girl was killed and at least five people were injured when a driver slammed into the sidewalk cafe of a pizza restaurant in a small town east of paris. police say the attack was intentional and the driver was arrested. signed antrump executive order to launch a trade investigation about china over the alleged theft of technology and intellectual property. it gives the office of u.s. trade representative the authority to consider the probe.
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trump said today that the doj has opened a civil rights investigation into the violence this weekend at the white nationalists march. the president also called out white supremacist for his role after having some backlash over his initial failure to call it out by name. the ohio man accused of driving his car into a crowd at the rally is in jail until he can -- until a bond hearing. global news, 24 hours a day, powered by more than 2700 journalists and analysts. "bloomberg technology" is next. ♪
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caroline: this is "bloomberg technology." tech mobilizes against racism and hate. the latest on what they are saying and how they impact silicon valley's relationship with washington. bitcoin's meteoric rise. another record high. we will check -- we will track the reasons behind its winning run. angry birds is hatching an ipo. will investigators buy in. president donald trump called out white supremacists for their role in the deadly violence over the weekend in the state of virginia. this, as the administration sought to counter backlash
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against the initial failure to directly hold hate groups accountable. president trump: racism is evil. and those who cause violence in its name are criminals and thugs, including the kkk, neo-nazis, white supremacists, and other hate groups that are repugnant to everything we hold dear as americans. caroline: trump's additional -- initial remarks of the weekend faced criticism from business leaders and lawmakers on both sides of the aisle, claiming his statement was inadequate. it also prompted merck c.e.o. ken frazier to resign from the president's council and prompted responses from silicon valley, including apple ceo tim cook, , "we must all stand against it. "
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the h.p. c.e.o. also said this. with us from san francisco, tom giles. from the white house, bloomberg news reporter jennifer epstein. i want to start with you, jennifer. we have seen the business community holding donald trump to account. it is an important demographic for him given he considers himself a business leader as well. jennifer: every time that there has been something that has been a bit objectionable, you see a little push back. one or two people involved in his councils and people he might someone,idered to be maybe not quite his pa are, but -- quite his peer, but of his level. elon musk dropped out of the c.e.o. council over the immigration push trump had a couple of months ago about banning certain groups from entering the country. now, we saw today ken frazier
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, from merck resign. within less than an hour from when he did that, president with a tweeted saying, now that you are not on my commission, maybe it is time to lower drug prices. i think that reflects tension going on for a lot of executives. they know that if they speak out against him on any of these issues that are controversial and seem to have a large part of the country, if not a majority turned against the president, if you do speak out, does the president tweet against you and does your stock price go down? does the president try to regulate against your company? what comes next? that is probably what a lot of executives are dealing with when they are not happy with how the president responded over the weekend and today. caroline: tom, we have seen companies responding in different manners today. not just directly to donald trump but directly to right-wing
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media outlets. we have seen godaddy step in and remove the domain for the "daily stormer" and we have seen google cancel that domain. violation of terms of service, we understand. airbnb has stopped some white supremacists from using their service. how difficult is it for technology companies to weigh in here? tom: i think the tech companies have a lot of leeway. they can look at their terms of service. they basically have rules against types of hate speech, inciting violence. it is not that much of a stretch for a company to say if you are encouraging violence, if you are encouraging hate speech against groups, jews, people of color, the list goes on and on. i think there is a lot of leeway. remember, none of these companies are forced to adhere
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-- some first ofndment principles in terms -- free speech is free for everybody so you can get on our site and say or do whatever you want. it does not work that way. it is interesting the way c.e.o.'s have been responding. i would say response to jennifer, yes, to some degree you are concerned about what he will say. elon musk, after having left the council in response to the climate accord move by trump, he has not gotten any retribution from trump. ditto for uber, which left over immigration issues. you don't see trump talking about uber. trump is very selective. drug prices were a hot button issue for him so it was not that surprising he would use some opportunity to do this. it's just very tone deaf and the timing could not be worse. caroline: we saw bob iger from
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disney and elon musk stepping down over the climate change issues with donald trump. the uber c.e.o. moving back on immigration. would we expect anymore to start standing down? has donald trump done enough to ease the concerns of the business community? we only saw one resignation, to be fair. jennifer: it sounds like there are a few people on various councils who are considering their options. we saw the president of the afl-cio today say he is considering his options. that is richard trumka. a very big move for labor if they chose to pull out of this. i think one of the challenges a lot of these people on these commissions are taking into consideration is that they want to be a voice at the table. they want to be part of the economic conversations. at the same time, they want to take a stand on moral issues. they are balancing those two
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things. that's why, i think you've seen that each time there has been a controversy, a few people finally say enough is enough. that may continue to happen if this president continues on the same course. caroline: tom, talk about what you have been writing about on twitter. this is a difficult balancing act. we have seen their policies potentially about to be tested. there is a twitter account supremacistshite actual protesters. , >> there is a handle @yesyoureracist, and what they are doing is they are crowdsourcing people to take photos of people who participated in the protest. they have gotten the twitter hive to identify who those people are. you are seeing some backlash.
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you are seeing one guy from berkeley who lost his job. i read another family disowned one of the individuals identified as having been in this protest. there are concerns or questions about whether we are identifying the right person. on the other hand, once you get out there and put yourself in public, to appear in a march, they're going to be photographers. it is a public space. you are making a public statement. you are not hiding behind some costume. you make yourself vulnerable to the public identifying you. there are consequences to what you do and participate in. this is what people are recognizing. twitter has become a means for identifying who these people are. caroline: fascinating discussion. we will see how the tech community continues to respond. thank you, bloomberg's jennifer epstein and tom giles. president trump has been pushing forward a new policy towards china. trump signed an executive memorandum that authorizes u.s. trade representatives to review
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and investigate china's potential intellectual property violations. in particular, the practice of forcing u.s. companies to transfer technological know-how. chinese state media on monday criticized trump's plans for a probe, saying the action will do more harm than good. coming up, bitcoin continues to surge, this time past $4000. what is driving this demand? we will discuss next. this is bloomberg. ♪
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capsule loaded with over 5400 pounds of cargo destined for the international space station. the dragon will spend the next couple of days in orbit before meeting up with the station on wednesday. bitcoin continues to show no signs of slowing down. the cryptocurrency soared past $4000 for the first time ever. this rally comes after a split last week that threatened to jeopardize growing mainstream interest. joining us, adam white. coinbase allows users to buy or sell bitcoin by connecting with their bank accounts and other digital currencies. the exchange announced thursday it received a $100 million investment. congratulations. let's get back to the bitcoin surge. i'm looking on my bloomberg at the moment. phenomenally over the weekend. this asset never sleeps. what is driving it higher at the moment? is it down to the hope we can see larger transaction sizes as
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the asset grows? >> i think that is right. we are seeing the market respond to a real improvement, a really forward in the technology that stands behind bitcoin. segregated weightness is improvement to the core protocol that could have bitcoin processing the same number of transactions as we see from the likes of visa and mastercard. caroline: what about geopolitics? there was a lot of talk of deals in bitcoin as opposed to the south korean won. i do think bitcoin and other cryptocurrencies are influenced by the macroeconomic factors at work. a good example is what we saw last week at fidelity. one of the world's largest brokerages. it is doing integration so coin-based customers can attach
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their accounts to fidelity and see their digital holdings in line with their traditional assets. it is those types of partnerships, international exchanges like in korea and japan, parts of europe, these are all factors that influence traders and the corresponding price of bitcoin. course, your general manager is particularly aimed at institutional investors. fidelity is one of the institutional investors ahead of the game. they are mining their own bitcoin, let alone integrating it into their own users being able to access the coinbase account. why are some institutional players reticent to get in? why do they need more trust to build in exchanges such as yourself? >> i think the c.e.o. of fidelity is a visionary. she sees something in where the industry is heading that is exciting.
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others may not be as quickly moving in the space but are absolutely investigating it. helping run gdax, i am speaking with these hedge funds, family offices, but try it -- proprietary trading firms. they say help us understand the , market. if i had to pick one thing i think will be a watershed moment, it is when we see more clear and consistent regulations. that helps give the confidence to institutions to begin trading this digital asset. that is at the forefront of every decision we make, how we become the most compliant institutional customer provider in the space. caroline: you deem yourselves the most trusted digital asset exchange. there have been worries about the hack in may. it is a small one, i understand. you have been gaining so many users. there are also issues about liquidity. how do you settle these concerns to ensure it can keep growing and taking on the institutional demand as it grows?
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to be clear, it was not a hack. it was a byproduct of illiquid assets. we can see movements quickly in the marketplace when customers place large orders. that is what happened in may and june. what we have really done is kind of recommitted to providing stability, transparency, the market integrity institutional traders require. we do that partly through the new fund-raising round. having raised $100 million, we are able to continue to reinvest into the team and customer support operations to provide world-class service to our customers and what they expect. caroline: the individual who lost $8,000 by coinbase because of his verizon phone, that was not a hack? adam: we call that an account takeover. that is when individuals have methods by which they will be targeted for either having their
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phone ported or their password compromised because they did not choose a strong password. we have ae, significant team that is there androvide fraud prevention we notify customers when we see signs of its happening, and we have a number of of proprietary steps internally we do. when we look at something suspicious, we lock down the account and many times, help right the customer as well. caroline: you have $100 million. plenty of priorities. customer support as you mentioned. what about expansion of the cryptocurrency base you accept? you have bitcoin, ether, you are looking into bitcoin cash. any more to be added to the portfolio? adam: we spend considerable time being thoughtful and provide a curated collection of digital assets that our customers can trade. on gdax, there will probably be more than we see on coinbase.
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before we add any more digital assets we want to get our , current product to a place where customers are getting the experience they expect and we have a stable exchange. after that, we will look at adding new digital assets. caroline: i'm sure the investor community waits with anticipation. thank you, adam white. vp of coinbase. coming up, we dive into the latest uber headlines. what one of the company's backers is saying. this is bloomberg. ♪
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you will remember that, last week, benchmark sued him saying firm.to the the suit escalated a simmering feud. benchmark owns a 13% stake. joining us to discuss is eric newcomer in san francisco, who has been on top of all things uber. great to have you back. talk to us about why he wants the private arbitration. eric: benchmark put out this letter today. it sort of illustrates why he wanted it to be private. benchmark criticizing travis for not hiring a c.f.o., and the result of the former attorney general eric holder's investigation into the company. that report to uber's board of directors has remained private. benchmark, in a letter to uber employees, made it clear it was a damning report and there is a lot in there that would look bad
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for him. given that benchmark is trying to say, there are these things you failed to do, it makes sense travis would not want that fight to happen in the public eye. caroline: travis trying to go private. benchmark trying to go public. this open letter to the employee base. in that letter, they make clear as to why they have decided to sue him. there were a lot of questions of why they did it so quickly. >> i think the benchmark point of view is they got this huge report from eric holder that documented a toxic culture and that the board agreed with the recommendations, including an independent chair, and even the public recommendations pointed to the fact that maybe travis could not be the one to fix the problems. they asked for a chief operating officer.
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looking at that report and the problems with kalanick, this is their complaint. caroline: bloomberg -- bloomberg technology reporter eric newcom er, thanks for joining us. a new startup is being sued by and at some employee who says he was fired for harassment and fraudulent actions. he also claims managers canceled loans to hide mistakes. the company is familiar with charles's allegations and "they were investigated in-depth by the company and found to have no merit." the suit comes on the heels of other high profile cases of unethical behavior across silicon valley.
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>> it's 11:29 a.m. in hong kong. the latest first word news. president trump has finally forunced white supremacists their role in deadly violence in charlottesville over the weekend. the administration tries to handle the fallout from his earlier comments. the president called racism people and said those who cause violence in its name are criminals and thugs. 32-year-old heather hayer was killed when a man drove a car into a group of people. and. trump: racism is evil those who cause violence in its name are racists and thugs,
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including the kkk, the of noxious, white wup -- white ists, and other groups. quitter: the third ceo to the council of business leaders. he says the divided political climate is causing serious harm to critical issues. ceo kevin plank stepped down. new york fed president says it -- hesonable to expect supports another rate hike this year if the u.s. economy continues to grow. optimistics create that optimism among policymakers, saying the economy is chugging along reasonably
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well. global news 24 hours a day powered by 2700 journalists and analysts in more than 127 countries. >> a check on the markets. the stocks in asia are up, bonds are mixed. the regional stocks are set for a second day of gains. nikkei 225 adding 1.2%. in wellington, heading for the highest close since 2001. the kiwi dollar is the best performer on this tuesday. in sydney, gaining ground for a second day. space,commodities heading for its lowest close in two weeks. move in theg some oil market.
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this is after the tumble that we saw overnight, bringing it down. take a look at this chart. you can see that rally in oil could be further under pressure. ♪ caroline: this is "bloomberg technology." the controversial h-1b visa program has been widely criticized for costing american workers their jobs. president trump: h-1b visas are awarded in a totally random lottery. that is wrong. instead, they should begin given to the most skilled and highest-paid applicants and should never be used to replace americans. no one can compete with american workers when they are given a fair and level playing field, which has not happened for decades. caroline: however, according to
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a new study from reacher series at the center for global development and the university of michigan, this visa program has provided economic benefits for the united states and india. the combined income as a result of the program rose by more than $17.3 billion in 2010 according to the research report. joining us in washington for an in-depth look into the program is the author of the study. thank you for joining us. first of all, talk to us about where the economic benefits are sprouting from for the united states, but also the countries where these foreign talented workers flow from. >> most of this is because the nature of the job of what these h-1b workers are doing. most are coming as computer scientists from countries like india working in the u.s. it ends up expanding tech
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production. is not justnology something you and i consume in terms of software, but technology is also something used by other sectors of the economy in the production process. car manufacturers use technology. the banking sector uses technology. innovation and expansion in technology production essentially benefits other sectors of the economy as well. this expansion in productivity is what raises incomes in the u.s. india benefited a lot from the program. they are the major suppliers of computer scientists. in 2012, 87% of h-1b visas were -- of computer science h-1b visas were awarded to india. indian workers and students started acquiring skills valued in the u.s. in the hopes of winning this visa and coming to
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the u.s. at the same time, h-1b visas expire and return migrants go back to india and bring with them knowledge and connections to help develop the indian tech sector, which then grew rapidly. there was an increase in tech production and economic growth in india as well. the h-1b visa ended up benefiting both the u.s. and india. caroline: the numbers you cite are dating back to 2010. can we extrapolate this was the case, that there was economic benefit on both sides of the equation from then until 2017? will this be damaged by the u.s. announcing new measures to make the program curtailed and perhaps eliminate the so-called widespread abuse of it? >> the results on average that the two countries are better off is robust.
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i expect, on average, both countries to be better off under the h-1b program even down the line. there are distribution consequences. some workers might be hurt by the program. what we find in our research is wage growth for u.s. computer scientists with slightly lower because of the h-1b program. u.s. computer scientists are a small part of the labor force. when you look at the overall benefits, they really far outweigh the cost of the h-1b program. since 2010, there have been other major developments. other countries are becoming major players, china and canada. it is important to take into account the fact that there are other countries competing for this global talent. if the u.s. tries to restrict the flow of talent from countries like india, we may see some of this migration flowing
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to other countries like canada. that might in that hurting the competitiveness of the u.s. tech sector down the line. caroline: interesting. this is a global theme to a certain extent. i am sat in the united kingdom as we debate the exit of the u.k. from the european union. issues about the free flow of migrant labor here as well. is it generally assumed that, the more you blockade, the less freedom of movement, the more you will damage economics? gaurav: often, you need to look at this on a case-by-case basis. our research focused on h-1b migration. in different contexts, you might find different results. it is important to keep in mind there are certain costs and benefits. even though certain workers might be adversely affected, you might have to think about whether the benefits really outweigh the costs and are there ways to compensate workers that
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may have been adversely affected because of the free flow of migrant labor or trade in goods and services. it is important for policymakers to keep in mind that when there are these distributional impacts, that there should be ways to relocate some of the benefits to compensate workers who may have been adversely affected. caroline: within your piece, the i.t. boom, another unintended consequence of chasing the dream. what then of these changes to the h-1b visa and whether we will see india continue to benefit or not, therefore? do you expect overall we will see continuation? do you think this needed to be changed because there have been many speaking out on both sides of the aisle saying it was not -- of the argument saying it was
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not fit for purpose in the way it was being used? gaurav: i am somewhat less concerned about what people thought the original purpose of the program was. i think it is important to evaluate the program on its current benefits and costs. right now, we find the benefits really do outweigh the costs. down the line, essentially what has happened, because of the h-1b program, is india has become a major producer of tech, i.t. india has overtaken the u.s. in technology exports. because a lot of this work is being outsourced to india, that is going to affect the technology production in the u.s. the good thing about outsourcing it to a country like india is in the u.s., as it imports the technology back from india it is cheaper. that means you and i can purchase software at lower prices.
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other sectors of the u.s. economy as well can purchase better software at lower prices. that is essentially what allows there to be productivity growth in manufacturing that uses this kind of software. that leads to income growth across the board. caroline: productivity growth, something the u.s. is desperately looking out for at the moment. postdoctoral fellow at the university of michigan and the author of that great report. thank you for joining us. the activist fund has announced a 2% stake in meal kit delivery service blue apron. the stock price is at nearly half its price since the ipo in it owns nearly 1000 shares in
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they also said that michael linton will join the board. angry birds is one of the most recognizable games on the planet. now, the maker of the game is planning an ipo as early as next month. the finland-based game maker could raise about $400 million with a valuation of $2 billion. with bloomberg deals reporter and asked him how rovio is planning it. >> many times, they have tried to sell the business. a few times over the last few years. they were unsuccessful. there have always been issues about valuation, how much is the business worth. we have seen a new wave of consolidation in the online gaming industry, video games. they have been very successful with angry birds. the problem for investors is what is next, what else do they have to offer? i guess that is the main challenge business owners are going to face. caroline: there are signs of
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diversification. angry birds has been a one-hit wonder so far, but they had newer versions of the game coming out that are doing very well. they are also doing well themselves. >> exactly. some of the funds for the potential ipo will be used to finance the follow-up of the first version which was , successful last year. what is interesting is we are seeing a lot of companies in this space. some of them in scandinavia. rovio is being bought by chinese investors, chinese conglomerates, which have nothing to do with video games, by the way. with all the issues going on in china with financing and acquisitions, people wonder what is going to happen with this company in particular. are they going to be able to find a buyer at the last minute before the ipo?
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they tried in the past and were not successful. is the ipo the only route for them as an exit? if so, how are they going to believe in the valuation of the company? that is the main question. caroline: the valuation is pretty high. they are looking for 10 times 2016 revenue. even though we saw revenue pick up in 2016. >> that is correct. i think investors are worried about these types of ipo's that have not been very successful in the past. the problem is they have tried to sell the business and are seen as a seller, so that will create pressure. that said, the franchise is there. they have an amazing brand. it's a really well-known tech company. i am sure investors, especially in a shaky ipo market, may see that as positive. caroline: it is a local listing?
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we will not see them go to america? >> one of the main questions is where they will list. our understanding is it will be in europe, most likely scandinavia. that remains to be seen. the u.s. would make a lot of sense as well. caroline: going back to the history of romeo -- of rovio, four or five years ago we saw , zynga approach them and offer more than $2 billion and they said we do not want it. this time, they are coming out potentially with an ipo. chinese buyers could be looking at them. who in particular? we understand tencent could be eyeing them. >> tencent has been eyeing video game companies for a long time. they have been successful and aggressive in terms of pricing. caroline: they bought one company who makes clash of clans. >> it was last year, like a $6 billion acquisition.
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super cell. at bloomberg, we followed that one closely. they could be a potential buyer even at the last minute. again it comes back to the , issues facing chinese companies now. we have seen not many of those acquisitions in the last few months. some of them are falling apart. that will be the key factor to keep tension between public and private investors coming along at the last minute. one interesting idea about rovio is you take a look at two of the crown jewels of finland. nokia a few years ago. i remember 10 years ago, both companies were seen as the paradigm of the finnish tech industry. both have struggled big-time. nokia has been able to rearrange a little bit and now they seem to be doing better.
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this company, as with many other tech companies, they refused to sell at a good valuation a few years ago and now find themselves with a lot of challenges. we are seeing it across the board. it will be an interesting story to follow in the next few weeks. caroline: that with some of my conversation with bloomberg news deals reporter manuel baigorri. coming up, we take a look at the top tech earnings this week. why alibaba and tencent investors may have more to cheer about. that is next. this is bloomberg. ♪
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stock exchange have risen over 76% since the beginning of the year. investors may have even more to cheer about when the company reports its latest earnings on thursday. joining us to discuss alibaba and other asia tech earnings that are catching our eye, bloomberg technology reporter selina wang. alibaba, what are the key takeaways? selina: we are expecting very strong profit and sales growth. alibaba has a lot of macro trends in china. more chinese consumers are buying online. bloomberg intelligence estimates alibaba makes up 95% of the e-commerce transactions in china. so, as long as that market is growing, alibaba will continue to grow as well. we probably expect to see more growth in newer lines of business. cloud computing has seen triple digit growth the last few quarters. digital media and entertainment. investors will be looking to see if losses narrowed in that area. one thing that might have investors slightly wary is the ebita margins as they spend
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aggressively to move into new lines of business and target reroll check -- rural chinese customers where it is expected to have the most growth. caroline: alibaba now trading at 64 times earnings. i'm looking at $.10 -- at tencent as well, a similar heavy price to earnings ratio. what are we expecting from tencent? selina: tencent is expecting another stellar quarter with double-digit profit growth. sales growth is said to be secure as well. tencent has not missed earnings in over a decade. there is no reason to expect this year will be different. they have huge growth coming from the newer game, honored kings. it is estimated to generate as much as $3 billion of revenue this year. it is so popular the chinese government said it was causing a negative impact throughout the youth, so they had to put controls on how much time people could spend on the game.
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another area is that ad sales are supposed to continue to grow market share. tencent has almost one billion users. it is very much the dominant social networking player. there is no reason they will not continue to grow ad sales and newer investments like video as well. caroline: just amazing when you are going into the bloomberg and looking at analyst recommendations for the stocks. tencent does not have a single sell. can we expect these heady directions in share prices continuing? are there any risks? >> both companies have very high expectations they need to reach. alibaba and tencent have made risky and large bets. they have both spent a total of $55 billion in deals just for 2016 and so far 2017. alibaba has mainly been investing in off-line retail and tencent in entertainment and content.
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i want to read a few interesting stats that are very telling. projections for share gains are rising faster than actual earnings. after rising more than 70% in 2017, alibaba shares are trading at a multiple of 64 times earnings while tencent is trading at 56 times profit. that is almost twice alphabet's 30 and facebook's 38. those are dramatic differences. some analysts say it is inevitable that, after a certain amount of time, there will be a market pullback and these valuations are much too high. caroline: they have been saying the same thing about amazon which is 100 times earnings. we will see how these numbers go. thank you so much, selina wang. that does it for this edition of "bloomberg technology." on tuesday, we will have coverage from san francisco and -- from the nba players technology summit in san francisco and hear from the men who created the event. curryiguodala and steph
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yousef: risk appetite returns to markets. investors are shrugging off north korea, seeing no signs of imminent war. >> there may be a way out of a missile standoff. kim jong-un was briefed, but made no mention of an attack. yousef: the uae's biggest listed company the estimates -- company beat estimates, and property sales also rose. >> and president trump says racists are
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