and ask how to get a $200 prepaid card when you buy any new samsung device with xfinity mobile. a new kind of network designed to save you money. click, call or visit today. ♪ emily: i'm emily chang and this is the "best of bloomberg technology" where we bring you the best in tech. how will washington plan for the sector's offshore profits impact silicon valley. we will discuss potential scenarios if the bill becomes law. plus, the bloomberg exclusive, armstrong offers his take on bitcoin, which continued its

spike this week. how the platform has tripled its user base since it picked up the cryptocurrency. as big tech races to control your living room, we hear from the brain behind amazon's alexa. first, to our lead. passedenate republicans their version, we explore the ways the proposed legislation could affect the tech industry. take a listen. >> it was a round of applause for gop senators as they passed their version of a tax bill. trump administration closer to its first piece of signature legislation. >> if they sent it to my desk, i promise all of the people in this room, i promise you i will sign it. i promise. i will not veto that bill. >> tech companies have spent to make sure their interests are heard. big tex stands to benefit in a few week -- ways. it would slash the corporate rate from 35% to 20%.

according to goldman sachs, the tech sector already benefits from a 24% effective rate. hordes of cashhe stockpiled overseas. big tech stands to benefit from this legislation that allows them to defer taxes on foreign earnings until they bring them to the u.s. at rates of seven point five to 14.5%, down from the current 35%. >> if we get this passed, we have to as a country, it is going to bring back $4 trillion back into this country, which right now cannot come back. >> in our view, it should be a repatriation. andhould be a required tax so, you are not asking the people that have had earnings from their international subsidiaries if they would like to bring back money. current bill would be a voluntary repatriation.

telecom firms could win big if enhanced deduction for the capital expenditures make it into the final bill. the radically allowing them to -- for now, the waiting game goes on until the final bill hits the president's trophy. -- desk. administration wants tech companies to bring back their overseas stockpiles of cash and keeping companies like apple from fleeing tax havens like ireland where apple reached a $15.4 billion deal. let's startd now, with the actual rate. it is a lower effective rate, but the effective rate is already fairly low. how much of an impact is this going to have? every business wants lower taxes. that is clear in all of the debate about the tax legislation this year. companies in and out of tech are happy to have a lower tax rate, even as a lot of companies are

not paying the 35% statutory rate because of tax rates. emily: how much money will this ring back? -- bring back? the'm not sure where he got $4 trillion. there are several million parked offshore that are considered permanently reinvested. but you have seen the ways companies like apple have done self repatriation. apple has $250 billion parked overseas, but is also borrowed $100 billion in the last few years to do things like buying back their shares, issuing dividends, things like that. you can look at that as a way to repatriate money without paying tax, which is what apple might be able to do under this proposed legislation. >> there are concerns about stock option legislation. where are we? a startupically

community's worst nightmare. this wasout and saying a version in both houses for a while that looked like it would force start up companies to pay taxes on restricted stock in immediately, even before they were able to sell the shares. an undued have put burden on a lot of corporate workers here in silicon valley. emily: what you make of the deal apple has made. they have come to terms on an escrow fund to pay back taxes they say they oh. dispute over irish taxes with apple is going to carry on for many more months. year, theember last eu antitrust authorities said to ireland, you have improperly given apple a tax break that has allowed the company to avoid something like $15 million worth of taxes over the years and you have to go get that back from ireland. there is basically a dispute

about what to do with the $15 billion while ireland, apple and the eu fight about that money. emily: how do you expect this to play out? in litigation be for a while. for a company of apple's scale, $15 billion is not a big burden. emily: this week, prominent tech accused of has been sexual misconduct and the said he is taking a leave of absence from his responsible -- responsibility at emergent hyperloop one. were amen said they sexually assaulted or harassed by him. current and former colleagues of a sixth woman say he groped her at an uber holiday party. he has sued the definer's, a research firm -- firm found did -- founded by republicans. they have responded to the suit saying they have nothing to do with the accusations and the

suit should be dismissed. in a statement, he wrote "as the legal case progresses, it is my responsibility to make the family is not adversely affected . i and confident i will be vindicated." google won dismissal of the california action lawsuit saying the company systematically paid mail employees more than females. was written that this does not distinguish between women who have valid claims from those who do not. she allowed the women to file an amended complaint. the new complaint will make clear that google violates the equal pay act by paying women less than men for substantially equal work. coming up, just days away from its debut, bitcoin kept climbing this week. how futures could impact the online trading platform. that is next. if you like bloomberg news, check us out on the radio. you can listen on the bloomberg radio app, bloomberg.com and

sirius xm. this is bloomberg. ♪

♪ emily: bitcoin continued to climb this week. it was selling for less than $1000 at the start of the year. in recent days, several exchanges have come out with news on offering bitcoin futures. ontalked to brian armstrong wednesday. when base is an online platform that allows users to buy or sell by using their bank accounts. it now stands at 13 million accounts. >> there has certainly been a big influx in new interest in digital currency. part of that has been driven by institutional money getting interested in the space. most of the large derivative exchanges out there starting to say, they are going to list it -- bitcoin futures.

big signal that traditional financial institutions are starting to move into digital currency. emily: what does it mean for you? does it create new challenges? >> it is a big endorsement of the digital currency space as a willasset class that more trade. it specifically means we offer data to a number of providers or are discussing it with them. we run the largest institutional exchange in the united states for digital currency. we are offering a can step -- custodian product where a lot of investors need a way to six -- store digital conservancy on behalf of their lps and clients. we launched a product for quinn-based custody. emily: are you at all worried your clients might decide to work with traditional main street wall street companies rather than coin base? brian: it is certainly an option. there will be more people

involved in the digital currency space, and i think that is a good thing. there is going to be a diversity of players out there. there will be a lot of winners. digital currency is moving so fast that i think a company dedicated to it with 200 people who have built up this industry knowledge over the last five years will have a competitive advantage. emily: you have been experiencing a glitch, as you have with prior surges. why does this happen? brian: in a word, hypergrowth. we have hired from 40 customer support agents to 220 or so this year. by the end of next year, we will have another 400 -- >> in addition to the 200? brian: yeah, and we launched phone support this year. we are going through a period of growth that is almost never seen in business. it is really difficult to be able to keep up with this amount of demand and we are not servicing our customers to the level they deserve at the

moment. that is frustrating to see but it is my job from the top to ensure we get that. emily: can you inch -- explain why that happens? is it a glitch, a crash, what is happening technically? brian: it is just a huge influx of new customers. our trading volume, new sign-ups, it has gone about 8x since june of this year. it is difficult to plan for that kind of capacity. emily: it is literally that you don't have enough humans behind the scenes to receive these complaints? brian: correct. emily: in addition to hiring new people, is there anything else you can do? brian: improving the product is the way to ring -- reduce the number of customer support tickets inbound. the team is working on that. the metrics we are looking at is average time to customer response, the core metrics we are looking at to make sure we are meeting demands. concerns you have any

this will reduce trust among new customers? you will lose your customers as a result? brian: i do have that fear. it is difficult to go through this rapid growth and maintain the same level of service. we have been watching those metrics and they are not where we want them to be. growth is a really high quality to have, but it doesn't mean it isn't a big problem. especially in financial services, we are held to a higher bar. we are storing people's money and people are right to call us to a higher standard. the irs has been asking more information about your holdings and profits. what are you hearing from your clients about this? the irs sent us a subpoena for all customer records over a several year. pushd push on th -- back on that strongly. the judge gave us a big vote of confidence and reduced the scope

of the request by 97%. it wasn't down to zero where we think it should have meant for something that brought, but it was a partial victory. long-term, we want to help people pay all of their taxes on digital currency gains. this should look like something like fidelity where everyone gets 1099 statements. it should be that simple. the irs nowng with thankfully to make sure we come up with a solution where everybody pays their taxes. this is one of those new areas technology keeps finding a new box that doesn't fit into the framework perfectly and we need to work with everyone to make sure we get there. emily: as you work this out, are you giving advice to your clients about how to report gains to the irs? to stay away from any tax advice since that is not what we do, but we provide a report to our customers, a cost basis report they can send to their accountant. that is the interim solution until there are 1099s. emily: let's talk about what is

happening to some of these other cryptocurrencies. what do you see happening with the cerium versus bitcoin? they evolved down different paths. bitcoin used to be 90% of the market cap in cryptocurrency and it has come down quite a bit. bitcoin is ending up, in my mind, being a little like digital gold. oldest cryptocurrency, the one people flee to in uncertainty. it hasn't become a payment network with the transaction put through people might want. ium is doing more transactions per day than bitcoin. newlso has a new concept of programs. --coin, you can think of

whereas this is almost a program language where you can run any software and running on a global computer. that is a mindbending concept but it is much more programmable. emily: you have launched a new app called toshi, which seems like an app store. what are you trying to do here? brian: the analogy i like to use is the internet. when it started, you had -- it was really difficult to use. a browser came out on top with netscape and made it easy for anyone to build an app and access the internet. we are doing the same thing with is a browser for the network. we are trying to make it easy for a developer to use the app -- to develop an app end-users. india, even in kenya, mobile money is a big deal outside the united states.

people in emerging markets could actually use digital currency to get access to financial services through something like toshi. emily: when it comes to the price, how do you see bitcoin ethereum? you see it surpassing bitcoin? brian: i don't like to give investment advice, but bitcoin has a certain amount of scarcity built-in. there will ever only be 21 billion -- million coins. ereum has taken a different approach. it might target two to 3% inflation per year. they are deciding what it will be. is not -- ethereum is not trying

to be like gold, it is trying to be more programmable. one more broad thing you could look at is where are the users going? where are the developers building the new apps? i see more developers building apps on top of ethereum today, so that is one factor that could point to what he will be in the future. emily: we talk about this a lot on bloomberg. his bitcoin a fraud or not? are we in a bubble or not? if it is not a fraud, is it a bubble? brian: i don't think it is a fraud. it is it -- is it a bubble, maybe. had a new plateau each time it comes up and it comes back a little bit. we are going through the most recent run-up period, the fourth for us as a company. i expect it to correct at some point, but continue over time in an upward channel. emily: there is an update called segue which would speed up transactions. when do you plan on implementing

that? brian: it is probably not in the next top five things customers are requesting. people want more assets on the platform, they want a better experience, meaning identity verification, higher limits, the sign up on boarding experience, and they are asking for these new. -- products. institutional customers are asking for a custodian product. people are looking to trade more assets, have a better experience and trade more securely. ceoy: that is coin base brian on strong. numbers that beat across the board as it tries to make the biggest takeover in tech history. this is bloomberg. ♪

emily: google is ramping up for

a hiring spree, recruiting thousands to reduce inappropriate videos on youtube. restrictions on advertising and making greater use of smart technology. by 2018, google aims to have more than 20,000 people to review questionable videos on the platform. the announcement comes as youtube looks to bounce back from a string of embarrassing incidents of questionable content discovered on its site. on the earnings front, broadcom beat across the board in the fourth quarter and gave an upbeat forecast. -- as the chipmaker attempts the biggest deal ever with an acquisition. we are joined with more. up lots ofe gobbled different parts. potentialned the acquisition, but they have already gaveled -- gobbled up some big parts of the semi conductor world. buyinggo -- avago

iphone. that company also dominant in the storage business. the results we see today from broadcom, looking back at the quarter that ended in october, really strong iphone business. really great strength in gathering more and more silicon not in the old iphone, but the new iphone. we see that business showing up in the results. 17% year-over-year growth in the semi conductor spaces very strong. emily: we have seen the danger of relying on apple as a customer. how much does broadcom? >> it is absolutely the most important customer. broadcom has been successful at getting apple to pay whereas others haven't. broadcom has been able to add

more real estate in the phone. interestingly, the quality of the phone calls apple likes to boast about, remember how crummy the phone was when it first came out? it was actually hearing the calls was more difficult. broadcom has a great chip that sits at the bottom of the radio chip and helps us to listen a little better to the signals that come in through the phone and understand what we are saying to the phone. it helps power siri. those chips are important to apple and they are relying on broadcom. what we don't know yet is how successful they have been selling new routers, selling into servers -- think of the companies and technologies that are struggling now. hewlett-packard having horrible problems, cisco barely coming out of a turnaround having trouble selling hardware. oracle struggling. business, having a really hard time.

yet we see the growth in amazon web services, microsoft as her, google's efforts in the cloud. what we see is people -- they may be buying chips from broadcom themselves. that is what i want to hear about the calm -- in the conference call. what success are they having selling into the white box manufacturers at amazon, microsoft and apple and facebook. emily: what update will we get, if any, on the progress of this potential takeover? >> a lot of swimming upstream for broadcom. there is a lot they could do to sway the market, that would be to talk about financing and how they perform this. guidance is nebulous. will, in the future, we see margins go from 60 to 65%. cashll see increased -- -- flows and percentage of net

income. we will have a much opponent -- financially stronger business. they are saying it will go from really good to really great. i don't know if we believe them. they don't have a history of missing targets. it is typical to give us a time frame in guidance. they are saying it eventually. nevertheless, it suggests they see great things for this business and would give them the financial leverage to do an acquisition. bloomberg's cory johnson there. still ahead, the brains behind amazon's alexa. you can check us out at bloomberg tech tv, 5:00 in new york, 2:00 and san francisco. this is bloomberg. ♪

emily: welcome back. i am emily chang. in 2014, amazon introduced the echo, a new device designed around your voice. the echo and alexa was for amazon prime numbers. that changed in 2015 when they were introduced to the general public bringing ai into our living rooms. we caught up with amazon had scientist for an exclusive interview. >> the set of skills will improve daily communication.

everything is changing in terms of behaviors. you set your alarms, you listen alexa, music through next what we will find, we are transforming from more natural transactions to more deep conversations. on the been working alexa price competition where it talk to to have you in 20 minutes in in gauging fashion. this is incredibly hard. even for a human at a party to talk to a stranger, 20 minutes is a hard barrier to be. are you focused on making alexa more humanlike and conversational? >> absolutely. we're working on make it more humanlike. we are looking into how alexa can understand different types of context.

one context that is humanlike, that we as humans do well is how we carry information. if i said, what is the first album from adele, and play it, then you know the references. similarly, context comes in various forms. , when are theing spurs playing next? in the u.s. it will mean the san antonio spurs, where as in the u.k. it will mean the soccer team. these are some ways we are making alexa smarter, and it will get better and that her. emily: what trends are you seeing in how customers are using it to shop, and are you encouraging them to shop? >> alexa is about improving daily convenience. .hopping is an important aspect

it is not the only aspect. one of the things is to reduce seemion, make attractions as seamless as possible. where we are seeing that happen very well, if you're trying to consumables, like reorder batteries, those are working seamlessly. now, with devices like echo, we are also making it possible for you to look at what you buy. -- by said, alexa, block a blue shirt, you can see a blue shirt on the screen. and then select by voice, which makes it seamless to buy things and making it easier when you are looking at stuff that needs to be on the screen for you to

make the decision. what isith privacy, alexa collecting and keeping, and allowing developers to access? >> privacy is very important to us. we are being transparent with our customers. i will start with first, it you look at how transactions happen in the, alexa only listens for the week word on the device. nothing else. it is listening for a particular snippet with sounds like alexa. work -- when a weak is spoken it streams to the cloud. ,ou see clear visual indicators on echo for instance, a light comes on. on alexa you see a light bar or blue ring on the screen, which makes it transparent. customers can go to their application that is on your

smart phone or on the web interface, you can look at every utterance you spoke to alexa that has been recorded. then you can choose to delete them, or delete all of them as an option for you. the reason that audio is collected is for making ourselves better for the customers. you have a partnership with microsoft. what can you tell us about the potential for more partnerships. >> we are very open to partnering. our customers want different choices. if you look at our partnership with microsoft, we are making it easy for four microsoft customers to talk to alexa.

we are open to this partnership because we want the best experience for our customers. emily: how do you view the competitive landscape? some people have brave reviews about google home, and it is getting more crowded. great that so many people and companies are interested in this space. that is great for our customers. at amazon we are customer centric, and we work back from our customer needs. we have been privileged to have millions of customers using alexa every day. that has given us clear needs that weise -- that we need to solve. i would also point out that we , our mission is to get alexa everywhere.

nowhe homes, in cars, and in the workplace. president andvice had scientist. the office sharing startup is set to become london's private renter of offices, this weworking to detail -- has announced expansion plans. they are also going to build a campus at the liverpool station for $800 million. the company is hiring 800 employees in london, predominantly in the engineering world. they are under scrutiny from british lawmakers who are concerned about russian interference in politics.

ceo for an with the exclusive interview. airbnb was to be the top destination for travel. this is bloomberg. ♪

emily: a european union court has sided with apple. could ruled that it easily be confused with the ipad. they applied for a trademark and can appeal the decision one more top court. eu's united nations designated 2017 as the international year of sustainable tourism for development. down with airbnb's global and policy affairs and began by looking at the company's growth. >> what is really interesting, we are seeing travel called the

flyover areas, and also an emerging economies. a recent report shows 250% growth in indianapolis. what that speaks to, the network effect of the platform, those are places that have been traditionally underserved. hard for those hotels to justify build outs. when you have the indianapolis 500 or the football championship, you see our platform spring to life. emily: you are spending in asia, africa, the pacific. what is the biggest challenge? >> the pace of the growth. .e just had our best quarter over 250 million able on the platform. this growth is taking place underneath us. it is incredibly important that we work as best as possible for

our guests. to sell onuse airbnb the recommendation of a friend or family member. i just came back from jamaica, tough travel. there was a conference on inclusive travel, how you can sureravel and make everyone is benefiting from it. from a sustainability perspective, a big part of what mostlked about, by 2030, travel will take place in these emerging markets. how can we do things now to make sure entire communities are benefiting? folks like us are making travel accessible. it is exciting but an interesting thing to have a conversation with. emily: any insight into whether trump's policies will impact international tourism? >> it is a great question.

we have not seen that yet. we had been out front in imposing -- and opposing the travel ban. .e have not seen that i think it has profound impacts on the u.s. i think where you see that, the u.s. brand, the home of the statue of liberty, does that take a hit as a result of that? it is growing so fast, i am not sure that will be the case. you do see the reverse of it. when i was in jamaica, a number of entries came up to talk to us about how we can make our data accessible to them. to help inform their marketing because they are looking to diversify their travel, their inbound. they were concerned about becoming overly dependent on the u.s. for travelers, and wanting to diversify.

that is being given by some concerns about issues taking place here in terms of how welcoming the u.s. is perceived to be. coverede be sleep sexual misconduct, what is your response to allegations? >> we believe what the women have sent out there. it has been a long time coming, and it was needed. there is a transition in the world. in terms of people willing to speak up and stand up on an issue that has been taking place forever. stories, you read the and i am incredibly impacted by the courage of these victims, these women to stand up and talk about these issues. we condemn any of that type of activity.

we believe what the women are saying. broadly, we are in the middle of a significant transition in what social mores are, and how the press covers it . how willing people are to talk about it and engage on it. that is important if we are going to address the underlying challenges. letang,hat was kris lehane,chris airbnb. >> there are several markets that are quarter less. market, that is the history. we are a big player in the product and design and manufacturing place. it has been an emerging market is constructing -- is

construction. that whole industry is digitized. >> is interesting in the procurement, if you work in procurement and design, in the actual design process you have faster and cheaper projects. >> it is even more than that. what is happening in construction is it is industrialized in. it is looking a lot more like manufacturing processes. construction has to be the same. >> you announce these big changes in the business model, particularly the move from maintenance to subscription, and how that is bumpier than anyone thought. the stock took a hit last week. in context, it is still a good run. a great run. we hit our goals. we exceeded up you. 25% recurring revenue growth.

we were going through the debt so we were decadent -- we were negative for a while. people expect us to do more. >> why would a customer switch from maintenance to a subscription-based fee for your service, as opposed to abandon it and go somewhere else? >> you talk to these companies all the time. customers are seeing companies like salesforce, workday, the way they buy software now is subscription based. most customers are saying this is the way the software industry is going. there is not a lot of resistance. maybe from smaller customers, but not the bigger ones. i kept hearing questions about the timing of the restructuring. why do the restructuring now? and what is it have to do with your long-term 2020 goals? there were a lot of

conspiracy theories. there is the famous john f. kennedy quote, the best time to fix your roof is when the sun is shining. we had been planning this for a while. invest moreeeded to strategically. money was not in the places we needed it. we are going to invest every penny back in the company over the next six to 12 months. it is a reshuffling of where we are spending the money. headcount wise we will be as big a company as we were before the restructuring. >> where do those resources have to be? >> we had a bunch of initiatives where we were not doing what we want to do. we were digitizing the company and becoming super modern. reimagining construction and manufacturing.

we had projects that were not in alignment with that. we are shifting money over to those that are more important. >> there is a concern over the substitution number. how many customers are joining the subtraction services. talk to me about what the story is there and what you expected to be. ofthat was the biggest piece turbulence from last week. we delivered a solid result in the core. when analysts are modeling this out, you get down to a unit perer, a revenue subscriber, when those numbers come out, and you are switching to a revenue recurring model, that starts to matter more. the revenue per subscriber is up 20% year-over-year. what they got spooked by, and it is natural because it is a complex transition, we just said we will do fewer clouds subtractions.

those clouds substitutions are not important to our to your goals. there small relative to the core. customer too.per a will be bigger 3, 4, 5 years out. what are the kinds of things you want to innovate around? investment.your >> we are going to be investing a lot and the reimagining how people do construction and manufacturing processes. you probably know this. construction is the lowest invested in i.t. next to agriculture in the u.s.. this industry needs to be transformed. it is investing crazy intentional technologies. we are going to help our construction customers become a manufacturer's of buildings. emily: bloomberg editor at large

cory johnson with the ceo of autodesk. , that's next. this is bloomberg. ♪

♪ emily: the ride hailing startup is valued at $11.5 billion. announced that is way lower, currently embroiled in a lawsuit. significantned share. uber faces significant scandals and legal battles. , the ceo is not

concerned. he says softbank and uber does not matter. exclusivelyh him from the summit in jakarta. is one of the most epic and innovating battles in asia. -- and theyredibly are incredible companies. it is an honor to be with them. the best of technology in ride hailing, with the most amount of funding. it is an incredible challenge to go-jek.ur we have been pushed to our limits so we have two hyper innovate. the urge to innovate. does go-jek have to change

their strategy? our productnk strategy and competitive strategy is designed around flexibility, hyper diversification, and mitigating risk. we have so many verticals that interrelate with each other. it is hard to deal with this animal called go-jek. you think you are competing with us on ride hailing, that you are competing with the user. you think you're competing on food, this is a wallet player that is leveraging that in order to reinforce. a difficult animal to get. as a result of that, a little bit of that business jiu-jitsu

that we have. that is how we survive and come out on top against some of the biggest companies in the world. 2018,t are the plans for especially since it is becoming a crowded market? we are actually the only large tech player in indonesia that hasn't he money license -- e-money license. we are one of the few. other large players do not have a money license. that is a good advantage. we are ahead of the curve. competition will come in, and we are expecting it, and we are embracing competition, because that is what makes our product great. travels outside our ecosystem and starts being

accepted in a variety of off-line establishments and a variety of online establishments. you will seek 2018 as the year of partnership. there is a long queue of partners that are trying to integrate go pay right now. could there be more consolidation in southeast asia? >> it is important to have the integrity to pursue our vision. that is only way to beat two steps ahead. we have always been the underdog in terms of funding and resources, and we still come up on top. it is not about how much funding you have, it is about how hungry you are to create an exceptional product experience. this: that does it for edition of best of "bloomberg technology." tune in each day.

are live streaming on twitter. check us out. that is all for now. this is bloomberg. ♪

♪ a new world for investment research. mean boutique firms could get priced out? into the insight landmark legislation ahead of next month's launch. ♪ welcome to "bloomberg markets: rules and returns." i am nejra cehic