emily: this is bloomberg technology. coming up, snapped sores in after-hours trading. how thetalk about social networking platform is attempting to stage a comeback. plus, a big apple the torture. -- big apple departure.

president trump's state of the union speech promises drama as another shutdown beckons. he has hinted at news of a proposal on drug prices. is the theme.ness ahead of the address, we are joined by a congressman who is at the house majority leader. what do you want to hear from the president tonight? what we have heard in the past has been confrontational and divisive. i would like to hear something along the lines that they project as we are going to hear about how we can come together and compromise and agree on moving forward.

moving forward on the issues that working people care about and what the election was about. for instance,- pre-existing conditions. this administration has done everything to undermine the availability and accessibility of health care to the average americans. thatpassed a tax bill undermined working americans and greatly advantaged the wealthiest and america. they shut down the government which hurt a lot of workers. 800,000 people put out on the street. those kinds of things, where we , lowest wagenation increases in almost a year happened last month. we hope to hear some positive things about how we can cooperate. how we can work together and invest in the economy and

infrastructure. bring a prescription prices down. he said that in the past but what he offered had no legs. i hope to hear something positive. that is not my expectation but that is what i hope to hear. has decidedresident not to declare a national emergency when it comes to border security. is that welcome news to you? >> yes. i think what he recognizes is that congress in a bipartisan way would oppose such an action. there is no emergency at the border and he would reflect. where theally congress working with the president should decide. i am sure he has decided that the congress would not support him in that effort so he will not take it. that is welcome news for everybody. there is no crisis. there is a challenge but not a crisis.

>> there is still some sort of compromise that needs to be made when democrats and republicans. what you think is the likelihood that we find ourselves in another shutdown? >> i hope we do not. if we cannot reach agreement by hopey or monday, i would that we would have an extension of government authority to operate. shutting down the government is a negative stupid thing to do. alongses great disruption -- among federal employees and all those who are served by the federal government. think something is wrong in america if it is shutting its government down. i would hope that if we cannot reach agreement by friday or that we atekend, least extend government authorization for another two or three weeks while we are negotiating. another representative told

bloomberg earlier that he supports a smart wall. is there any kind of wall that you would support? i guess the definition of wall is in the eye of the beholder. clearly, we have supported fencing in the past. we want to make sure the border is secure. we are for a smart wall. we have offered substantial investment in technology and what a truck or car contains without going in basically into it. more personnel, humanitarian concerns, health care and housing concerns at the border. making sure people are safe. we are supportive of investment and making the border secure and safe. what we don't think is the whichng a 30 foot wall

over,ople go -- can go under, or around is not the smartest investment to make. when he to get to an agreement and i am hopeful that we do. >> stacey abrams will be getting them democratic response. where do you see her future in the party? >> she is an extraordinarily able legislator and candidate for governor. everyone i talk to says stacey abrams is one of the smartest, most effective and best politicians that they know. i think she has a great future ahead of her whatever she might do. she is obviously a very able individual. >> we have been covering regulation ofd big tech companies. what do you want to see there? >> all over the world, people

are concerned about the privacy whether itformation is financial information, medical or other. have open want to communications in our country, free communications, we also are concerned about security of our personal information that it is not used for purposes that would harm us. when you deal with this technical issue, it is a complicated one. i think we need to do it. europe is ahead of us on this. some people might say behind us. i am sure that we are going to have very substantial hearings into this issue in the house and senate to determine what is government's role in this and how do we protect people. go into tonight, the

president is expected to tell what he sees as his success on the economy. where do you think he has and has not succeeded when it comes to the economy? under growth was greater president obama. what happened was the policies they were pursuing in the bush administration led to the deepest recession i have ever experienced. obama brought it back. he had a growing economy. president inherited a growing economy. it has grown somewhat. the things he said was going to happen have not happened. him factories leaving notwithstanding his comments. we have seen his trade policies confuse individuals and worry our trading partners.

not having the result is that it would have. i mentioned the tax policy earlier with respect to what he promised during the election. he is going to give a tax boost to the middle class. what he gave was a tax cut to the worth -- wealthiest corporations and people in the country. i think his promises have not been cap. muchank you so congressman. snapchat reported fourth-quarter revenue that exceeded analyst estimates. the signals the company is trying to figure out how to squeeze more money out of a stagnant user base area remember that snape has lost more than half its market value such the ipo. we have guessed a for their reactions. -- guests here for their

reactions. take that users are stabilizing after a few periods of decline? >> i think it is great news when you get something positive out of a company that is competing with facebook. facebook is so powerful. they have choked off almost all startup activity anywhere near their space. when i see snap, i worry because obviously, facebook has been snap like features in instagram. that has had a huge impact on audience growth whereas instagram is growing rapidly. i still think the snapchat situation is perilous. i worry about their vulnerability -- viability long-term. what do you think are the

highlights of instagram versus snapchat? >> everyone is expecting a decline. the user growth story has not changed. we need to change the narrative at snapchat. this company went from 31 inlion to almost $5 billion december. in context of devaluation, three things are working for them. first is that the valuation is more reasonable. second, the usage by millennials is still intact. seeing that the cops have come down drastically in ad pricing. they have some revenue growth potential here. especially if they pitch themselves as a tv for millennials. expectations wise, i feel that they can outgrow the revenue

growth that is projected. snapst do you think is long-term future? if instagram continue to integrate features like snap? >> that remains to be seen. the challenge is the company has been's maintaining stability on the inside as well as growing the audience on the outside. i think it is a really hard time to compete with any of the big three. amazon, google, and facebook in their core markets. they have massive modes of data and network effects that make it incredibly hard for companies to sustain anything. i totally take his point about the valuation that has been low. even so, i think the valuation and expectations may be appropriate if you take a long-term view because of the

challenges of competing in this space. that is not to say that you can't make market, that you want -- not viewing this as the money you are going to send your children to college on. >> don't go anywhere. thank you so much for weighing in. from ally to opponent, coming up we will talk about the new book on the rise of facebook and the danger he says it is posing to the world. that is next. this is bloomberg. ♪

emily: a young mark zuckerberg launched facebook.

if you ago, roger mcnamee became a mentor. since that, things have changed. roger mcnamee has gone from becker to vocal critic. this is from a memo that he sent to facebook's leadership. recently facebook has done some things that are truly horrible and i can no longer excuse its behavior. facebook is enabling people to do harm. it has the possibility -- capability to stop harm. what next is an incentive to do so. this is laid out in his new book. he joins us from new york. that was before the election was called. haveears later, we confirmed that russia meddled in the election. facebook has admitted what a big problem fake news is. the company still reported record profit and user growth.

is there a mismatch between your concerns about facebook's harm to the world, the media concerns and what the public really wants? >> here is the thing i would say. with respect to the earnings, it makes total sense that they would have had a blowout quarter. advertiser, you have to go where the audience is. facebook has a largest audience on earth. it has the big -- best targeting. i am trying to introduce people to a book. a i want to reach people with book about facebook and instagram, there is nothing quite like advertising on facebook and instagram. i am not remotely surprised they had record earnings. something every analysts would note is that there are more -- at a your newsfeed in the used to be. many asobably twice as i would've had a year ago. i don't know how many ads they can put in the newsfeed before it harms the experience.

there are an awful lot of them. >> it is not just about that. it is about user growth. i would like to suggest that a tad of skepticism would be appropriate. you may remember eight or nine months ago, they told us they had blocked a billion inauthentic accounts from being formed on facebook. when you block a billion inauthentic accounts, you have a lot of opportunity to let some through if you need to. facebook also said that before long they will stop reporting facebook as a broken out piece. they are going to its -- integrated with instagram and whatsapp. we also learned that from nielsen, usage on a per use basis is down. doesn't matter so much other than people have

changed their behavior. you saw this in the 2018 midterms. the effectiveness of disinformation was radically reduced with at least a portion of the facebook audience. that was really encouraging. i look at these things and i say i understand why the stock is up. the problems are forward-looking. we need to address them. >> you are suggesting facebook could be not shutting down as many faced -- fake accounts. >> i am not suggesting anything. i am saying you cannot exclude that. facebook has automated systems for getting rid of hate speech. what they define as hate speech has a large influence on the percentage of successful capture. we cannot audit is a black box. facebook has huge incentives to make the numbers appear to be rising. if you look at their past

behavior, what is the argument for taking the number at face value? i don't see it. released a statement about your criticism saying we take criticism seriously over the past two years we have fundamentally changed how we operate to better protect the safety and security of people using facebook. reality is roger mcnamee has not been involved in facebook for a decade. that is true i've not been involved for at least nine years. i am an analyst. i don't need to be on the inside to observe. they are saying that they are protecting users. last week, apple expel facebook for a day and google as well for having research applications that they tried to sneak into the app store through a private portal and those apps were

spying on the users who use them including a significant percentage of minors under the age of 18. i would not call that protecting users. the prior week, facebook had a legal case accusing it apparently without conflict of encouraging children to spend lots of money on purchases and games. in some cases, thousands of dollars. they did nothing to stop it. they tried to pretend as though it was not a problem. say those are two disturbing things. also last week, facebook kicked off from public a out of doing the audit of facebook's political advertising site. sure facebookng was doing a complete job and they stopped letting them do that. give upt week, snopes

working with facebook and said they are impossible to work with. i would argue that the current -- suggest that facebook is not making progress in a material way. >> i sat down with sheryl sandberg last week and asked her why should anyone trust facebook ? listen to what she had to say. >> it has been a challenging time for facebook. we need to earn back people's trust with the steps we take. we changed our profitability because we want to take the

heart steps -- heart steps to protect people. decreasing the distribution of fake news. these are ongoing problems that we are determined to do the hard work and keep doing it. >> facebook has hired thousands of people to double down on safety and security. they say they have changed the algorithm in the newsfeed to gear up more toward personal news rather than world news. i know none of that is enough for you. what should facebook be doing? what should users and the government be doing? >> here is the way i think about the problem. have studied this for three years to try to understand why this stuff happens on facebook. i am still a shareholder. was one of the crowning achievements of a longer career. i am proud of facebook and it

bothers me that this is not going well. it is not in my economic interest to be a critic. convinced that the business model is the problem. essentially have an advertising business model that depends on monopolizing the attention and manipulating the attention of the user. the outer rhythms tuned to focus on emotional things that trigger , or tickle people with rewards of some kind. for longdo that enough, people develop a habit and an addiction. then they are vulnerable to manipulation by bad actors on the outside. >> we could talk about this for hours. more coming up, this is bloomberg.

♪

emily: coming up, apple's leading after five years. we will talk about her replacement, next. this is bloomberg. ♪

♪ this is bloomberg technology. i'm emily chang. disney reported first-quarter results that beat analysts expectations as they pushed further into streaming with plans to launch its own online video service later this year. haveng us to discuss we roger mcnamee, longtime tech investor with elevation partners. what are the headlines you would pull out here? >> as you mentioned, the big magic word is streaming. this is a transformational year, a year of transition where they

will be making all of these investments for the big product, the disney plus service later in 2019. as far as physical quarter one, it was a pretty solid one. the theme park was a standout. all of the investments are really paying off. he had a reason price hike. 10% adjusted operating income growth. also holding up pretty well. the company management gearing up for losses in the director consumer segment. emily: roger, what is your take on what is happening in the streaming wars? these companies like netflix and disney spending billions of dollars on original content, all to have that direct and exclusive relationship with the consumer. roger: it is a great time to be a consumer, right? there are so much fantastic content being produced right now. what is interesting is how willing consumers have been to unbundle their video while

maintaining lots of different relationships. there was an article that the cable model worked in part because it be brokered up in pieces, the friction would cause people not to spend that much money. that is not the case so far. i don't want to pretend that i know how this will turn out. i do know this massive spending original content is going to run out of gas somewhere. at some point, you will hit saturation of how much can really drive to inscriptions and how much penetration you can get for each platform, but we are not there yet. until that, i think consumers of the biggest winners. it is hard for me to imagine disney not being successful because of their control of unique content targeting pretty much every bracket age-wise, but especially little kids. at the same time, you know, they are coming up as much later than obviously netflix and amazon and a bunch of others who are not going anywhere. consumer wins.

emily: with the launch of disney plus, disney also pulling its content from netflix. what do we know about what we will actually see on disney plus? geetha: disney plus, there is actually going to be a pretty slower ramp up in terms of content. they will have a deep library of their own i.p. they will have all the marvel, pixar, star wars content. what they are doing this year is pulling the content off of netflix. that is going to result in some loss of licensing revenue. along with all the films -- captain marvel which they will release in march will be the first film on their service, disney plus service. ofy will see some loss licensing revenue from netflix in addition to the investments. emily: we have heard polarizing views on netflix.

some people think it will hold on to the crown. will remain the streaming king or queen, if you will. but, others say that netflix could become the aol of ott. what do you think? roger: i have not a clue, but i will tell you betting against it has been a terrible thing to do. there have been a number of times in the history of netflix that i did not get it. i learned my lesson. i'm basically going to assume he will pull it off. the thing i will observe is netflix has a data advantage. they really have a sense of customer preferences that has to be economically game breaking continued to visit and others. disney will have a concert advantage because the pixar library, children stuff. obviously, the marvel line and some fox stuff. they will give them a full set. because of the way disney prices things in the purchase market, i think there is a lot of demand

for a lot of streaming, particularly of the pixar and disney animation. it is going to be interesting to see how this plays out, but i would definitely not bet against netflix. if the stock gets creamed, that would be a buying opportunity. emily: i want to ask you about our next story as well. geetha, thank you so much for stopping by. apple has said its head of retail operations angela ahrendts is leaving the company after holding the job for five years. the company has appointed deirdre o'brien who runs human resources to take over of the senior vice president of retail. mark gurman joins us with more. roger mcnamee still with us. mark, what do you make of this move? mark: a massive departure for apple. it is the sixth senior vice president to leave the company. since tim cook became ceo in

2011. averaging about give or take a departure a year on that top tier of executives. since coming from blackberry in 2014, she transformed apple retail into what she calls the new meeting place. she really put her fingerprints all over the stores. you can see the new sliding glass design like we have seen in flagship store in san francisco. she has remodeled dozens of stores across the world. taking retail stores into new markets like the united arab emirates and mexico and thailand so she made an impact. very significant departure. emily: angela ahrendts made a big splash when she left burberry to join apple. roger, no secret that apple is in existential crisis. iphone sales slowed down and questions about the next big thing. what is your sense on whether apple can rise out of it?

roger: i want to put forward what may be an unusual point of view on this. but i don't think apple is facing an existential crisis at all. i think the iphone was probably the single most successful product in the history of technology, maybe the history of anything. eventually, it was going to stop growing because you will run out of market. i believe apple's next pivot, which is well underway, the pivot to services. retail is a huge part of that. having a place where you can get things serviced, having a place where you can go and learn about the features and services has proven to be in enormous the advantage. ahrendts' work was fantastic. what i would look at is the following -- i think apple has focused for years on a growth bundle, focused on the app store at itunes. now in a saturated market, they need to focus on a place they

have the greatest competitive advantage and that would be insecurity and privacy. where the iphone's advantage over all android phones is so gigantic, that in my opinion, it makes up for the difference in price. i think as people look at what is going on with facebook, with google, with all of the things that are in the smart device like, with alexa and the you will see apple pushing the privacy they very successfully. people will sit there and go, look, all else being equal, but rather have a company looking out for my interests than not and that would clearly be apple. emily: mark, tell us about deirdre o'brien and what you make about the fact she will be running people and retail, which are two big jobs. roger: deirdre o'brien is one of the most trusted executives of tim cook. mark: she has been with apple for two decades. prior to becoming v.p. of people, she was one of the top

operations and sales executives at apple. she was the one helping churn out products at this rapid pace, getting them into distribution hubs, stores. she is really the impediment of what apple has pretty much done better than any other company. getting its products physically into the hands of consumers. it makes sense for her to go back into that operational role in terms of being a retail head. however, her position is a departure from what apple has tried before with retail chief and that is all three of the previous retail heads coming from a real till company before it. ron johnson was at target, ceo of jcpenney. angela ahrendts from burberry. john browett was at one of the -- best buy in the united kingdom and working retail in europe right now for a woman's clothing company. this is something new for apple, putting an operations person,

people person in charge of retail. it is a new formula for them. people have complained about apple's retail operations in the past and this might do the trick. she is the academy of what apple does best. there are plenty of things to criticize apple for, but the things they have done best, she has been in charge of. emily: mark gurman will keep us updated. roger mcnamee is sticking with me. well, there is a sign that demand for super bowl ads may be peaking. along with the size of the audience. research of cancer media says cbs took in $382 million in ads. compare that to when nbc got $408 million last year. ratings show the viewing audience was slightly over 98 million, the lowest since 2008. coming up, a startup that aims to clean up documents and spreadsheets has gotten a lot of attention from high profile investors. now, it is making its public debut. that is next.

this is bloomberg. ♪

emily: coda, a startup that aims to transform the workplace, made a big splash raising $60 million from high-profile investors, including general catalyst and reid hoffman. in 2017, the platform launched its beta and now making it public debut. joining us to discuss is the ceo of coda and a partner at general catalyst. you actually started working on this for years ago and just

launching today. you call it a new kind of document. you must be pretty special if it was four years in the making. what the you mean by a new kind of document? >> it starts with a pretty set of observations. we think in this world full of applications, every team we see runs documents and spreadsheets. all of those platforms were invented four years ago so we decided to build a new type of document. it went all the best parts of documents, all of the others into one new service. the goal is to allow anyone to make a powerful document. google has google sheets. microsoft has its enterprise software. what attracted you to this? >> i think shishir is doing a good job describing the product, but when you really try the product, you get to start thinking about the use cases.

the document itself, it has changed. it is more of an app. it endssinesses today, up leveling the playing field in many ways. rather than having complex package software, you can have all of the workflows on there. ,ne of the questions i asked how many companies are fully running on coda? it is amazing how many of them are moving from building documents in this software, this brand-new coda. emily: what is the competition? microsoft word? google docs? shishir: it is a wide set. people use coda in simple use cases, taking notes in meetings, all the way up to things you would normally use database for. organizing, maybe inventory or customers, all the way up to building real applications where you could build systems that can run whole businesses. shishir: you are the head of

product at youtube. emily: what did you bring from there to here? shishir: i had a great time at youtube. two big things. one is the way we work. we ran youtube on documents and spreadsheets. how we use those tools inspired coda.re metaphors in the other one is how the ecosystem worked. online video would do to cable what cable did to broadcast. we would go from three channels to 300 channels to 3 million channels. all of a sudden it will qualify to build high-quality video. similarly what we think is happening in software is there is a set of makers that people that are problem solvers, toolmakers that can take the problems they see in front of them and build their own solution. they just need a new set of building blocks. our goal is to empower that group of people. similar to what we did with you tube, allow them to build the tools.

emily: more broadly, general catalyst was an investor in snap. what else are you looking at? what is hot, what is not? hemant: this is a tremendous time for innovation. a lot going on in tech. a lot going on in health care. then, i came to coda's team. small business software is a massive thing. you have seen amazon's services. what coda is trying to do in terms of a document platform, these are massive opportunities. emily: shishir, you're also on the board of spotify. do you think that was the right call -- i am sure you think it was the right call, but how has it worked out and the right call for -- shishir: i'm excited to see what happens. obviously only works for companies that have a few characteristics and a big enough

brent that people understand you -- brand people understand you. if done well, it can be really impactful. much more cost-efficient, but it also levels the playing field for existing employees and existing investors. i am excited to see what happens. emily: what are you expecting? hemant: what is really interesting about slack, it is an enterprise company that can do a direct listing. with spotify, it is a consumer brent and makes sense -- brand and make sense. it will be interesting to see what happens. emily: we will see. thank you both, shishir and hemant. coming up, roger mcnamee back with us from elevation partners. he will talk about the final tech landscape and had winds he sees coming -- headwinds he sees coming in 2019. that is next. this is bloomberg. ♪

emily: amazon appointed former walmart executive rosalyn brewer to its board. brewer was ceo of walmart's sam clubs business from 2012 to 2017 and then joined starbucks where she served as director. she is the fourth woman on the amazon board out of 10 and the only black director. in new york to talk about the big tech landscape. say,ne who has a lot to roger mcnamee is back with us. roger, i'm wondering if your criticisms of facebook extend to google and alphabet and amazon,

which are other companies that have built their businesses by collecting our data. roger: emily, google is, i would say every bit as bad as facebook on data privacy. i think you can make the case that they are likely to be much worse going forward. i think the only place where amazon is in the same level for this kind of stuff is in its new ad businesses where it is starting to join the party. the issues with amazon are largely confined to two problems. that their alexa businesses are obviously in surveillance and using that for their advertising. that is a big threat. but, they also have the issues of just classic antitrust in retail. i think of them as mostly a different thing because the alexa business and advertising business are relatively small. google by contrast, i think, is hoovering up everywhere and

very active in artificial intelligence. their products are very strong, but where i think the company is not taking responsibility for -- making sure no harm is done. one of the biggest issues we have had an early versions of a.i. is the importations of biases in the real world. for example, job searching. biases against women or against certain races. those kinds of things which exist in the real world are somehow being imported into a.i. because they are using real-world data sets to inform them without adjusting for implicit bias. google has a lot of issues going forward, particularly in europe. i think that is the only negative i see as the outlook for the tech industry in 2019 that is specific to tech. like 2018, i think the uncertainty in the world, the fact that the administration is

going for nationalism over international trade -- i think that is incredibly disruptive to the whole tech sector, the whole economy, and that makes me very nervous.i think almost any day you could wake up with a piece of news that scares the market and i don't know how to factor that into my thinking. i'm older, so i am conservatively postured but under people can look at this a different way. emily: i have a chart that shows the comparison market cap of the companies. it is certainly notable because apple and amazon have pulled back from the trillion dollar market cap. microsoft is in the lead. how are things changing in 2019? you see facebook's business model under threat, but do you see a great reordering in the hierarchy or more of the status quo? roger: to be clear, i see facebook and google's business model as the threat. i think the hard part is the are not under threat.

that in fact, they are doing a very good job of placating regulators and placating users and placating investors. yes, the stock has some really difficult days, but it is marching back now. ere strong. in q4 w some of the comparisons in the coming quarters will be difficult, but at the same time, i think that facebook is frankly still in control of its destiny. if you are me and an activist, trying to persuade people this is an existential threat, that is very frustrating but it is how things are. what i am saying to people is listen, it is much more important to protect your children. it is more important to protect your own mental health. it is more important to protect democracy. privacy. let's make the tech world more competitive. let's go back to making products that empower us as opposed to products taking away --

emily: the you think -- do you think anything can unseat anyone of these four companies? roger: not anytime soon. not without any trust regulation, there is no chance. these guys are incredibly well-positioned and we live in a world of the organization with nothing to slow them down. emily: roger mcnamee, out with a new book called "zucked: waking up to the facebook catastrophe." thank you for spending an hour with us. we will be watching the progress on the book from here. roger: just remember, we have more control than we don't. emily: all right. that does it for this edition of bloomberg technology. we are live streaming on twitter. follow our global breaking news network tictoc on twitter. this is bloomberg. ♪

shery: first word headlines. contracts following the suspension of work on the operation in brazil. whenat the mine was halted a judge questioned the condition of the workplace. they say there is no technical or risk assessment and taking appropriate measures and has not said how contract may be affected. sources in washington think president trump have decided against declaring a national emergency on the mexican border during his state of the union address later. exploring the idea of bypassing congress and securing military money for his much promised wall.