♪ >> i am emily chang in san francisco and that this is "bloomberg said -- women technology". we will break down disappointing fourth-quarter results. could an indictment be coming soon? u.s. authorities are investigating whether the smartphone giants way way stole trade secrets. a push in the middle of an iphone down for -- a downturn as

the apple ceo is sounding the alarm on protecting user data. we are breaking down suggestions for congress. netflix shares slipped after fourth-quarter revenue came below wall street estimates. that is a sign that an explosion of programming has not reeled in viewers as quickly as expected. the company faces a crowded field in streaming with new offerings from disney and at&t's warner media. now slower than expected growth will put more of the spotlight on a recent spot -- price increase. here to discuss our analyst. they added a record number of subscribers and investors do not like the results given what we are seeing with revenue. primarily the guide and not the actual. they sent some false signals, per box numbers. that made us believe so many

people were active at the end of december that they would blow away domestic subscriber addition numbers. they went to exactly what their guide was. they raised the price two dollars, coming out to $1.5 billion of higher revenue. guide -- they guided the same -$3 billion cash flow. people expect cash flow to improve and it is not going to. they expect profitability to go up and it is not. investors are more confused than anything. they are not getting what they expected. i want to underscore that netflix burned through $3 billion in cash in 2018. they say 80 million people watched bird box. roma wasn't shown in 900 theaters and is running awards.

the multiyear plan is to keep significantly growing content well increasing revenue faster to expand operating margins. taking the price increase into consideration, do you think subscribers can continue to grow fast enough to justify spending? >> subscribers dick groat this past quarter. -- subscribers did grow this past quarter. the fact that they over delivered on subscribers showed they are still getting new people to sign onto the service. going forward, they will face competition. not only are the services coming on board going to be competing for viewer attention, but taking some of their own content off of the netflix platform. netflix has a lot of competition the price increase in addition to mitigating the cash aimed at then is

company not having many other levers to pull in order to increase revenue. >> you mentioned a double way may. netflix said they think fortnight is bigger competition then hbo. all things considered, how do you see that impacting subscriber growth over the next two years? >> that comment is idiotic. i'm sorry. i am confident i know more about fortnight than he does. paul was spot on. it showed top 20 programs by viewership in november on netflix, 13 war before studios -- were the four studios that are launching competitive services. 11 -- they were 11 of the top 13. the top six programs on netflix

were warner bros., disney, fox, or universal. the content is going away. i do not know if it is all going away. i the end of 2020, i bet all of the content is on their own services. the double sword is netflix will buy whichthey can places pressure to develop originals. there originals stock. -- suck. they have programs that they call original but they do not own them. they were bragging about bodyguard. it was phenomenal but it is bbc. they do not own ozark. until they can create their own stuff -- stranger things is original -- until they have a dozen of those, they will never replace what they are losing. that is a good point that

netflix owns a small percentage of the content we think of as original because you can only get it on netflix. is cominge growth from international. how much does the competition ?atter >> it matters because the u.s. is the biggest market. backing up on ownership versus exclusive licensing, what matters to subscribers is where they can get the piece of content. is a technicality. if netflix has exclusive rights for years and they are drawing new subscribers, that is the magic that matters. to your question about international, that is where growth has been focused. of years ago, netflix crossed the line of having more subscribers outside the u.s..

same line withe revenue. that is where growth opportunities are. they are closer to hitting the ceiling of what they are capable of in the u.s. than in other populated regions. continue to follow the reaction to netflix results as they come in. great to have you both on the show. coming up, huawei probes. turning up the heat on chinese smartphone makers. could federal charges becoming? if you like bloomberg news, check us out on the radio and on sirius xm. this is bloomberg.

>> after the wall street journal reported, the u.s. is considering rolling back tariffs on china. the ideas coming from steven mnuchin. he denied the report saying neither he nor the trade representation -- trade represent plantation said that. -- representation said that. markets had a volatile reaction to this back and forth. where are we? rideite a roller coaster going into the closed in the last hour of trading. same place we were before the original headlines hit. when the first headlines hit saying the nation had suggested

because the tariffs trump administration is insensitive to financial markets and the moves we have seen last .onth, we saw markets despite we saw a boost when we got the rollback. markets led higher. the nasdaq and a dell are still in the green. where this puts us with trade between u.s. and china, it puts us back where we were before, sadly. >> what is next? we are expecting higher-level talks in davos. >> we are. ofh a device for mayor china. those come later this month. investors should be looking out for headlines. i am sure as of the talks go on, we will hear headlines. attuned to will be

whether these actually give us material gains in the right direction or kicking the can down the road. the narrative has been talks between the u.s. and china have been going well and we are moving forward. president trump has said he would like to get something done because of the way markets have been reacting. we do not have anything material yet. time. in a waiting we need headlines to show the u.s. and the china are willing to make concessions, there are things they agree on. us posted. thank you, sarah for the update. u.s.-chinath tensions, federal authorities are investigating huawei for stealing trade secrets. a 2017be is tied to civil suit where a federal jury found huawei liable for stealing t-mobile's robotic technology. the investigation marks a move

by the government against the world's second-largest smartphone maker. facing scrutiny -- scrutiny from six different governments. the doj investigation is at an advanced stage and an indictment could come soon. spokespersons for the doj, t-mobile, huawei, all the client to comment. studio is thethe lead of the firm china team. take on this increasingly aggressive stance from the u.s. toward huawei? >> this is a long time coming. this is not new. it is getting rolled up in the and china areu.s. coming to a resolution on a trade dispute. this is muddying the waters. first, the cfo's detention and canada and a possible extradition to the u.s.. >> is she under house arrest? >> still in canada and

potentially facing extradition. this week, legislation is being introduced that would ban that u.s. companies from selling to -- zte and of the prospect of this criminal investigation against huawei. a even william barr said in hearing that he is skeptical about zte. what are the applications of an indictment? up as predecessors set china initiative to enhance investigations against chinese entities who are potentially influencing american entities or engaged in illegal behavior. huawei is at the center of that latter part. this is consistent with what we are hearing within the trump administration, we want to get

tough against entities undermining the u.s.. huawei has had a target on its back for a long time. >> how could this impact trade talks? >> it was interesting in december to watch the canadians take the blame from the chinese in the arrest or detention of huawei's cfo. tryings the chinese were to keep the huawei issue out of the u.s.-china trade talk discussion. now what the issues coming to the floor in advance of the vice premier coming to washington, i find it hard to believe the governments will not have to discuss while way -- discuss huawei. it is becoming increasingly vocal about this being outside the rule of law. some of these suppose it investigations -- the doj has not confirmed that -- and the

detention of the huawei cfo. u.s.-china trade talks are going to have to include discussion about that. >> these are having an impact on u.s. businesses. apple cut its forecast. we are seeing a slowdown in iphone sales in china. a lot of that is directly a result of the issue versus a smartphone issue. we are seeing apple suppliers get hit. was on bloomberg television earlier. take a listen to the response but this could lead to an iron curtain. >> this is bad. we need to figure out a compromise position to help both countries get to what they are trying to get to without breaking down the fundamental value of connectivity. >> you are talking to u.s. citizens. what do u.s. businesses want? >> u.s. businesses want to be

able to operate in china with a level playing field and not face undue discrimination in doing business in china. what is to become the largest consumer market in the world and increasingly the destination for r&d research related to ai. our companies want to be in china. they do not want to be discriminated against. they do not want to have to transfer technology or be subject to undue burdens. i am sure american and european thenesses and green with of trump administration trying to come to an agreement with the chinese to open the china market and eliminate some of these unfair trading practices that the chinese have been guilty of perpetrating. however, we do not want the remedy to hurt business. tariffs are not the answer.

decoupling the economies are not the answer. a wayss wants to find forward and continue to grow. >> there is confusion in the understanding of some of the top officials about what they want with the journal reporting that steven mnuchin is in favor of giving china a deal. the treasury department has denied that. how do you think this plays out? typical among the players leaving negotiations with china to have different views of what leverage we can deploy. secretary mnuchin is saying, if we make a goodwill gesture, then the chinese will start to address the structural issues talkthey have been slow to about with the u.s. others believe giving anything

midway during the negotiation will decrease our leverage. this is the kind of discussion i am sure is happening of how do we get the chinese to move on the structural issues, not just buying more imports, but dealing abuse,e subsidies, ip technology transfer issues that have to be addressed in order for president trump to make good on what he wants, a comprehensive deal on trade with china. we will continue to watch these talks play out. thank you for stopping by. its 10thn celebrated anniversary as the world's most famous cryptocurrency. academics are betting on a new virtual currency. we will discuss next. this is bloomberg.

>> 10 years ago, bitcoin was the original cryptocurrency. academics think they can do better. professors from seven u.s. colleges teamed up to create a e, a currency expected to process 10,000 transactions a second compared to bitcoins 3-7. joining us to discuss is the co-ceo of pantera capital. what makes you think this can best of bitcoin? >> >> -- has become a version of digital gold. originally, people intended it to be used for making purchases and interacting with people in a decentralized way, placing a bet or trade. bitcoin is slow. these professors are working on making it faster.

>> fisa process 1700 transactions a second. you say this can process 10,000. how? computeroblem is every running in the network has to process every transaction like if you have a calculator and you did to times two, every other calculator did that. these guys are working on separating that making it so that you can do multiple calculations in parallel instead of doing them sequentially. your bet is that this new currency could go mainstream. why? >> it will be a long road. it is difficult. some of the areas of where this can be useful are things like smart contracts and decentralized obligations, things were bitcoin cannot be used because it is slow. >> bitcoin may not be such a feat right now. it has not been performing well.

what is your outlook for the broader market sentiment around cryptocurrency going forward? >> we have seen a route past 12 months. it has always been like that. we have had runoffs and collapses and cryptocurrency. it is faster than you see in regular markets. i am optimistic about this overall. we have seen a draw for the past 12 months. going forward, we will see people focusing on building technology and acquiring users. >> is it the scale issue a life-and-death issue for crypto? >> i do. my biggest concern is if we do not solve the issue within the next two years, the tech will look like 3-d printing. thatl idea but not use much. >> what are the prospects for solving the issue? >> they are relatively high.

look at the challenges the internet had the face, it was more difficult. people had to lay copper while. here they have to solve problems that are hard but can be solved the software. , there are dozens of proposals for how to do this. the next step is incrementing them. >> the crypto market lost 80% of its value last year. what happens this year? ande will see choppy waters slowly grind up. >> co-ceo of pantera capital. thank you for sharing your predictions with us. coming up, netflix slower than expected growth. priceg a spotlight on the increase. we will bring the latest from the company's fourth-quarter report. glassdoor has employee reviews for over 83,000 companies. we will look at how the come --

at how the reviews are standing for big tech. this is bloomberg. ♪ .

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emily: this is bloomberg technology where we joined bloomberg daybreak: europe to to bring the global tech news the. >> let's look at the global tech stories of the day, shares of a jewelry and watch maker when soaring after they agreed to sell the smart watch intellectual property to google for $40 million as part of a millionportion -- $48 as part of the deal as google wants to ramp up competition to take on the apple watch. competition commissioner is set to set a penalty targeting the adsense advertising service in the coming week, the company has

$7.6 billion in fines and potential -- faces a potential threat for more if it does not obey the user order to change his behavior. netflix with underwhelming fourth-quarter earnings, their revenue missed analyst estimates , posting $4.1 billion. while growth shows to be slowing, most of netflix's growth come from overseas and they believe international markets will one day count for as much as 90% of its customer base. those are the top global tech stories we are watching. emily: thank you. speaking of netflix results, i want to talk more about this subscriber growth, record subscriber growth, 80 million people watching bird box and awards for roma with roma -- with revenue not keeping pace. how is their brand being

received in the asian markets you cover? international growth is where netflix says most of the future growth will come from. have is ubiquitous but you regionalized competitors producing so much content, tencent and others in that space. a lot of apps and programming choices within markets like china that are domestic. interesting, you wonder expectations and if they were too high given the decline in the stock price. paying moreking of for netflix after they announced their planning to raise toscriptions for one dollar two dollars per month but a lot of competition in asia. emily: i was just in hollywood attending the golden globes and

from the entertainment industry, there is a lot a fear and awe of netflix given the volume of content they are producing, the amount of money they are spending on it. if you look at growth in the asian markets in particular, they are not betting on china as we know, difficult for u.s. media company to succeed there. they are putting a lot of chips on india where they say they are planning to add 100 million subscribers in the coming years. competition from the indian entertainment industry is fierce. >> they will need to create in-house hollywood style -- bollywood style programming to compete. it makes sense they talk about the growth they expect to see in this part of the world because outside of china, india, the demographics point of view, lucrative.

and indonesia and southeast asia penetration media is extraordinary. for facebook and instagram. >> concentration and focus for the company should be on mobile, in india people own more mobile phones than they do personal computers. that is a huge area of growth for the indian market. .mily: absolutely i want to bring and lucas who covers netflix for us. what is your read on these results, record subscribers but revenue not keeping pace and netflix burning through $3 billion in 2018. >> the challenge on relying on overseas markets, they had their biggest quarter ever, the biggest year ever in terms of subscribers but they missed on revenue likely because of foreign-exchange matters, and in the letter they said that most of the money they are collecting now is not dollars.

the revenue the subject to the currency markets around the world. the cash burn is a concern but no more of a concern this quarter than in previous quarters i would imagine, specially because they said, their casper burn wallet will be the same in 2019, will ease in 2020, and the other take away was that they talked about how many people were watching their shows in a way i have not seen before. these metrics are vague and we have to trust the company on them but they talked about viewership for a couple of different series, a spanish oh, you from the lifetime network, i have not heard them talk about viewership before. competition, you have other content providers really trying to catch up. >> they have been pretty steadfast they are not worried about it and they said in the letter they are more worried about the video game fortnight than hbo.

their ceo has made the same point, they do not believe netflix is ever going to replace all television viewership for all film viewership but they want as large a share as possible. comcast,from disney, apple, warner media, that is a butern in more competition it is already very competitive marketplace in terms of consumer time. netflix is been a more on programming for the internet and for their service than any of those companies will be for a long time. emily: you are spending time in hong kong, how are netflix prospects shaping up in asia? we do not expect -- expect china to be huge for them but netflix is making a big bet on india. >> yes, they have all but given up on getting into china where you have the three tech giants with their own services but netflix is focused on india, focused on korea, focused on

japan. for had a big presentation journalists in the region in november where they announced 17 or 19 different original series. the are using a strategy and some of these countries similar to what they have done in the u.s. where they license big shows from top providers in the country and beam those around the world. if it is a popular -- a popular show in korea, one of the most watch shows in the country, they have forever were else and if you like korean dramas and there are a lot outside of korea, that is something netflix can provide you. they do not break out country by country growth and it is hard to project what they are doing in korea or singapore or india, but the guests on optimism by their spend, and they are investing more in original programming at a faster rate here than anywhere else. >> does this give new context to the price rise? >> i think the price rise is

inevitable and they have indicated they have every intent to continue to raise prices because they believe as they spend more they need to charge more. >> thank you for that. lucas joining us from hong kong. next, more, this is bloomberg. ♪

emily: to a story we continue to follow from the global smartphone slowdown, taiwan semiconductor, the main chipmaker for the iphone gave a revenue outlook that was sharply below market expectation but analysts still expect optimism about the couple he going forward. here to discuss it is alastair far. one of the biggest chip companies in the world, what is the significance?

months, then recent smartphone market is the best technology market that has ever existed and it is slowing down. massive global supply chain and the adjustment to that will be longer and more painful than people think. apple, a good example, we know what they will do for the holiday quarter, forecasting for the next three months, that will not be very good. emily: how many of the suppliers supply to chinese companies? >> huawei designs its own ship but -- chip but they are still a huge customer. emily: it is not just because of apple? >> no, but that is a big one. huawei's chips go in their own phones. emily: when we talk about the

suppliers, how closely tied are there forges -- four -- >> tsmc, the smartphone market in general but happen -- apple pioneered what they do so well, instead of buying a chip from intel and intel designs it, apple designs it and tsmc manufactures it. that has been a huge boom, a great relationship. when apple slows, they will suffer. emily: we heard negative news going into this apple revenue cut, are we expecting to hear more? forecast implies apple is not seeing much of a pickup over the next few months, traditionally a slow quarter for apple, right after the holiday season. expectations are pretty low and you can see that with tsmc shares. they are only down about 2%. emily: i want to talk about

other apple news. tim cook making a call for protecting consumers, saying in magazine thatime "consumers should not have to tolerate another year of companies irresponsibly amassing huge user profiles and data breaches that seem out of control and a vanishing ability to control our own digital lives." he talked about how he sees that going down. a slowere has been drumbeat from tim cook criticizing the business models of facebook and google, not always mentioning their names specifically, along with increasing scrutiny from both sides of the aisle about how these companies do business. how was cook's op-ed received in washington? >> one of the interesting things he was talking about was the going after the data brokers that allow companies like facebook and google and all kinds of other consumer facing companies to build these

consumer profiles. he wanted to put a registry at the federal trade commission about that. a lot of people thought that was interesting. there has been a conversation at the think tank level but not at the legislative level talking about what do we do about these third and fourth parties that have our data and looking beyond facebook and google. it was welcome but whether it makes it into legislation is a huge question. looking at the third and fourth parties and the ftc, he was in the mainstream. emily: calling on congress to pass comprehensive federal privacy legislation and wants the ftc to establish a data broker clearinghouse that requires all of these third and fourth parties to register so customers can track their transactions. but if you say, buy something online from an online retailer, that retailer may very well go sell your data to one of the third parties brokerages it makes money on it trafficking

that data. ftclikely is it that the and perhaps congress would take this on? >> it is entirely possible. my understanding of the conversation right now around a federal privacy bill focused on how to empower the ftc, not whether they will empower the ftc. when you go through this process, when legislators go through it, they look at all kinds of things they could pass to take away -- maybe give away a little bit of power on this topic but that -- not another topic. having tim cook inject this into the conversation elevates it. not that they will take it on necessarily but they will be coming and say, does this make sense? i do think it is something they have to talk about. emily: interesting to hear tim cook calls for privacy at the same time going through an iphone slowdown. -- and facebook, google,

under pressure for their business model but he is not saying, apple accepts billions and billions of dollars from google to have their apps on the iphone. >> that is right. critical -- ever hypocritical? >> apple is not doing that directly but taking a lot of the profits with google for that. side with datap collection is a little bit better than android. a lot of the apps on an iphone that they track your location. part of the point of data brokers, it depends whether facebook or google would be in one of these clearinghouses. if they are not, that legislation would help facebook and google even more. emily: marco rubio has injured his privacy legislation, ron wyden is expected to introduce

privacy legislation. all of these big tech companies spend a lot of money on lobbyists on capitol hill, whose messages are lawmakers hearing? is facebook and google speaking to them? or are these message from apple having an impact? >> google and facebook are speaking to them and going to their offices and making their --ch, but the drumbeat from everything started with cambridge analytical has really pushed legislators to want to act. it is important to see that bill you passed in california in the middle of last year has made industry want to come to congress and get a federal standard that can preempt some of the state laws. they are hearing facebook and google because they want to move something forward that can create a federal standard, but would make it so that california

when it comes into effect at the beginning of next year, may not have the teeth they spoke at google are most worried about. emily: tim cook mentioned it is not too late to do this. but finding something republicans and democrats agree on is elusive over the last couple of years. how far out could an agreement be? >> yes, absolutely. we are looking at legislation may be march or april. the senators have suggested it is sooner. my sources think it is a little bit farther out. you go to the committee process. you have to go to two committee processes, you have to have congress you have to go to and it can take a while. if you are committed to doing it, you have to do it in the first year of a congress, because they will get into a presidential election year that will suck up a lot of the oxygen around washington by the end of

next year. you have to move quickly. think of can currently a few issues that are sucking up the oxygen in washington in the middle of a government shutdown. thank you both. isll ahead, glassdoor expanding its global operation, where the recruiting service is launching its newest site next. this is bloomberg. ♪

emily: glassdoor is betting big on global expansion, they have announced the entry into singapore, hong kong, new zealand, bringing the total localized sites to 18 globally after they ditched its plan to go public and instead was acquired by a japanese hr company recruit last year. i sat down with their ceo to discuss. >> we have a million people a month using us in singapore,

there is a thirst for transparency in the labor market. they have a customized glassdoor experience and app. it is a global concept, when you're making a digital player go to work, understanding what it is like to work there and fair pay, it boundaries and we knew that but we have slowly have been launching in countries year after year and are live in 18 markets. emily: an interesting year, you were planning to go public and changed course. companya japanese hr for over $1 billion. why did you make that decision? >> probably the hardest decision i have ever had to make. we were working on going public. acquisition, we have been talking for years about this. at the end of the day, it was about a mission, we try to figure out how to help people

find a job in a company they love. that we could do better as part of recruit, a japanese company, they are the world's largest recording company and our sisters company, the world's largest job board and we are the leader in what we do and being a part of the ecosystem and having access to the shared data to companies can bring to bear on helping people find jobs, we felt we could do better as part of them. emily: is it the right call in light of the market volatility today in the public market? >> we are building for the long-term and we knew there would be volatility and it could be a challenging time, especially for a recruiting company, we are a recruiting company. it played into my thought process. the bigger issue was -- if you think 10 years down the road about our mission, going public, being independent, or part of the world's largest recruiting company, we thought of the latter. lyft goingr and

public, what advice would you give them? >> no one-size-fits-all, going public is a frantic event but a complicated one, increased scrutiny and everything. i thought about mission, i thought about what was best for employees, and in our case we would operate completely independently, very important to me. and what was best for our customers and jobseekers. when you put that together, the answer is not always go public. emily: there has been a dark cloud over a lot of tech companies over the past few months with scandals and controversies that facebook, apple iphone slowdown, hundreds of billions of dollars wiped up the market cap of the biggest tech company -- wiped off the market cap of the biggest tech company, are you seeing changed in employee morale and how much employees like to work at these companies? >> we see slight degradation income is like facebook and apple. it should be noted they are still the best places to work, apple is one of three companies

that has been on the best places to work with for all 10 years we have been publishing it. slightly less but still in the top 50 places to work in the country. snap is a different story, they are struggling. they have lost i think almost two dozen executives over the last several years, only 44% of people would recommend it as a place to work to a friend. they have a 3.0 rating, down from a 4.0 1.5 years ago. it is materially degrading. emily: one of the things about glassdoor, you get a lot of data but it is so hard to generalize what it is like to work at one company. what are you doing to get more data? more analysis to beef up the opinions? >> part of what is special is that it is not generalized. the power is you can go and read the individual stories from people who work there. but we have all kinds of ideas about things we can begin, other

interesting areas weekend put information run diversity and inclusion, workplace telling us. -- workplace from minas. -- friendliness. emily: that doesn't a for this edition of bloomberg technology. -- that does it for this edition of bloomberg technology. this is bloomberg. ♪

asia,come to daybreak from our global headquarters in new york. next two hours we were bring you the news you need to know as markets open across asia. ♪ >> top stories, wall street to easegher, they want u.s. tariffs on china but the treasury denies a plan. as mixed earnings reports adjust it is spending free on content may not pay off as quickly as expected. china