tv Bloomberg Technology Bloomberg May 8, 2019 11:00pm-12:00am EDT
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♪ emily: i'm emily chang in san francisco and this is "bloomberg technology." coming up in the next drivers hour, for uber and lyft turned off their apps on wednesday to protest what they say were declining wages at a time when both companies are raking in billions of dollars. how will the strike hit the companies as both enter the public market? plus facebook's blockchain bet. social network's secretive team now has 50 employees and
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may announce a new product, a type of cryptocurrency, later this year. and a new report says hackers co-opted tools of the nsa. how a china-linked group turned the table. but first, to our top story. it is a big week for uber. but the road to an ipo is often bumpy, and simmering tensions between drivers and uber are flaring again. drivers in major cities across the u.s. and u.k. went on strike wednesday over low wages and unstable conditions. the protests are familiar to anyone who followed the lyft ipo. in march, the company pitched itself to investors and protesters attempted to picket the roadshow. joining us now, the coo of fountain, a company that works with gig economy companies. also with us, bloomberg tech's eric newcomer. he is in new york and covers uber and lyft.
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how big are the protests and where are they happening? eric: this is all over the world, designed to really draw writeion to uber drivers ahead of the pricing and then the listing on friday, so this is, you know, a global effort i , think. there are questions about the effect. these people can still get cars. but, certainly, their presence has been made known here. emily: anecdotally, it sounds like it hasn't really crippled the app. is that correct? eric: it is super hard to do. by its very nature, uber can be responsive to a strike. because the drivers get paid more if there are not enough of them in the marketplace, so i do not know about seeing into that dynamic, and there are different places, but, yes, as far as we can tell the app is perfectly , operational at the moment.
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emily: the reality is that there are more gig economy companies, more workers in demand. how do you think a strike like this will affect uber? micah: i think a strike like this is more of a pr exercise , and, also anecdotally, my wife , was able to use an uber this morning to get to the airport at a roughly normal price, so i think the more interesting question than the impact of a one-day strike is whether or not driver retention or gig economy worker retention over the course of the next couple of years will suffer as we see these companies maturing with workers starting to understand which pay the best wages, which have the best work, and have the best lifestyle to offer. emily: a couple of quotes from drivers. a driver for uber saying, "i'm striking because uber has broken their promise time and again. uber cut our rates and tried to tell us we would be earning more even though they paid us less." a lyft driver said, if something
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happens to my vehicle, even the wear and tear to my car, it can push me into more debt. our expenses keep going up. meanwhile these companies are , getting rich. we need them to reduce commission and give drivers a fair share of the revenue. what is uber saying about this today? eric: i think they are trying to take a sympathetic ear to drivers. i mean they are not shouting , down these protesters. i think they understand that it is always sort of a challenged relationship. you know, in the s1, uber talked about bringing down driver subsidies or incentives, as uber talks about them could further , irritate drivers. i think that is going to be a challenge because obviously uber is a company that lost $3 billion in operating losses last year, you know $10 billion over , the last three years, and yet
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drivers, which are a main source of their costs, clearly, from these protest, feel underpaid, so solving those two problems, one, drivers who don't feel like they make enough and on the other hand, trying to make money is going to be a huge challenge for uber. emily: talk about the ripple effects, what this could continue to have on the gig economy. could they make more if they are a delivery driver for post-may -- doing tasks for task rabbit. micah: as they are able to build a stable business model that numbersates the right and then get the model in place , that will retain drivers and workers, whenever those workers do, wages, i expect, will fluctuate. some of these companies may find they need to raise wages in
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order to keep these workers on over the course of the time period they need to be working to be profitable. and if that happens i expect , that some companies who have more margin to spend on labor will find labor costs going up over time. other companies may have less margin, and in that case, those companies will either have to change their model, or i think we will see over time some of these gig economy companies get driven out of business as we see whether or not consumers are willing to pay the higher prices that may be imposed by higher labor costs. emily: do you think they will be driven out of business given demand for their services? micah: probably not. they have huge stores of capital. lyft has fresh capital, uber is about to get fresh capital. they have bigger momentum. this is also their core business. they are in a situation where they have to figure that out. i think there are many other companies out there that either have gig economy workers as part of the core but do not have the
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same advantages, that may struggle, or companies that have either been developed as a strategic add-on to a company that has a profitable core business, a grocery company or something like this, and those companies will adjust from uber and lyft. meantime, eric, you have international leaders speaking out. jeremy corbyn in the u.k. said uber cannot be allowed to get away with huge payouts for their ceo's. stand with these workers on strike today across the u.k. and world asking you not to use uber between 7:00 a.m. and 4:00 p.m. today, #ubershut. well, uber has only one ceo, but from the point of view of drivers, how much does that ceo make? when you are looking at many of these employees who are about to get rich on an ipo, is it easier to understand their position? eric: right. the uber ceo received $45 million last year according to
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the s1, so he is obviously getting very well compensated for his job, and it is a striking contrast to how much a driver is getting paid. obviously, uber has a political problem, especially on the left. obviously, alexandria ocasio-cortez tweeted about this. bernie sanders has been talking about it. so i definitely think, throughout this democratic primary, i wouldn't be surprised if candidates keep talking about uber. you know obviously, this is a , great moment to talk about it. because uber is about to go public, sort of a vulnerable moment for the company, not the press that it wants right now. there is going to be this liberal conversation in the democratic primary and i think that will be a moment to talk about labor in america and obviously uber is sort of central to that story. so i don't think this is going away once uber becomes public. question is just whether that conversation can actually turn into some sort of
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federal legislation that would actually change uber's business or if it is just talk. and i think that is going to be the question going forward. emily: well, the conversation will certainly continue as the strike continues to unfold. our very own eric newcomer and micah rowland, thank you very much. well, ibm kicked off a bond offering that could make it the busiest week and months. they plan to sell bonds in as many as eight parts to help fund the $33 billion acquisition of red hat. ibm still expects the deal to close in the second half of this year. coming up, facebook has a plan to start making money off whatsapp. and it is making london the center of what it hopes will soon be a global phenomenon. that is next. and if you like bloomberg news, check us out on the radio, the bloomberg app, bloomberg.com, and in the u.s. on sirius xm. this is bloomberg. ♪
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emily: ever since facebook acquired whatsapp in 2014, the question is been, how do you monetize it? well one way is by trying to , turn into a mobile payments platform. and we now know they are trying to use london to drive the global expansion of whatsapp for mobile payments. facebook is not stopping there. it has got designs on using whatsapp to transfer its very own cryptocurrency. here to talk all about it, our fin tech reporter julian new -- julie, in new york, and here in the studio kurt wagoner. , what is facebook doing here exactly?
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kurt: this is kind of an office expansion. so they are going to add 100 employees in london. they are going to be working on whatsapp, on payments, security features. whatsapp is a global platform, huge in india, europe. they think this is maybe a better recruiting ground for them to launch this payments initiative. emily: how does it work? kurt: right now it is being tested, and only in india. imagine you are sending money to friends, family. you want to do that anyway that is obviously secure but also convenient, right, and you're probably texting with these people. whatsapp has the messaging. if you can add payments on top of that, there is the feature. emily: the other part of this story, facebook working on launching its own cryptocurrency. how does that make sense? julie: i think this may be a way for them to do more cross-border, something they are
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exploring with david leading it. the president of paypal for a really long time. they are going cross-border with blockchain, something that could work fairly well if you have other players coming into it. to have people actually use whatsapp and this sort of facebook coin or whatever they might call it to send money to family and friends in other countries, and have that is one stable currency. avoiding lag time and things like that it could actually be a , good thing but if you think that, this isn't the first time facebook has tried to make payments work. there's a reason they want to have really smart people on this team to even have a shot at making something like this come off of the ground, because there are other companies out there that are very competitive in this space. payments is just cutthroat in general. it is going to be a long shot but they do have smart people on
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this team as they work on this. emily: let's talk about that. mark zuckerberg hired david markets, the former ceo of paypal, to run messenger, that he went off to work on this secretive initiative. he has, as we understand it, hired a bunch of former paypal employees. sort of a new age paypal. who are these people? kurt: julie is the expert on the paypal stuff. she had a great feature this morning on bloomberg. kind of about who is being hired, but you can see that david is starting to bring over these people who he used to work with at paypal, who are obviously payments experts to say, to julie's point, this is a really hard problem. facebook has not nailed this, not been able to plant a flag, in this space, so if you will come into the payments space you , want to bring over people who have built this stuff before.
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emily: who are these former paypal employees? julie: it is going to be a lot of people that viewers people have not heard of, outside of david. people working a lot on peer-to-peer payments, on fraud protection, on things they will need to have industry knowledge on if they want to get this off the ground and actually make it work in terms of getting mass adoption, a lot of consumers to trust using this after a rough year and half or facebook, business waning, consumer trust, and protecting against fraud as well. this is something people might want to hack into, misuse, that they know going into it that they will have to protect against. does this kurt, how fit into the broader strategy and the broader challenges that facebook is facing right now? kurt: i think 99% of facebook revenue comes from one business model, which is that they show people targeted ads. this is definitely a new
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opportunity for them. there has been a lot of talk about should facebook diversify it is ainess or that feature people are using all around the world, but there is also some untapped potential for them in terms of that this is something they are not there is some hope from investors to figure out, what does the company do that is not just advertising? emily: all right, kurt wagner. all of these issues for us thank you. , coming up, byron allen's entertainment studios picking up momentum after securing another tv deal. how the comedian and former tv host is expanding into local broadcasting. and, of course, we are livestreaming on twitter. you can check us out there, and follow our breaking global news network tictoc on twitter. this is bloomberg. ♪
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emily: fiber network owner zayo group is going private. in a deal valued at $14.3 billion, the buyers and the stockholm based company partners , the price represents a 14% premium to the closing price tuesday. the company has been under pressure from activist investors, including starboard value. comedian turned businessman byron allen is building an entertainment empire. after taking part in sinclair broadcast group's $9.6 billion acquisition of fox's regional sports networks last week, he announced plans to buy four tv stations in indiana and louisiana for over $160 million. his stations already own several syndicated shows and acquired the weather channel last year but this week's deal marks its foray into tv. first we sat down with allen to discuss.
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>> when the assets became available this past summer i , reached out to the head of disney and said we had interest. they put us in touch with their investment bankers, and then something else became available that we started to pursue, and large asset. >> what was it? >> it was tribune. we were very interested in buying tribune broadcasting. phenomenal asset. nexstar prevailed, they are a tremendous organization. hedoesn't amazing job, and won the asset. we turned our attention to what is next. we saw that the rsn's had not been concluded. i'm a big fan of rupert murdoch's. i think i've read everything about him. i've always told him when i run into him that i'm his illegitimate son. this is some of his best work, these rsn's. i will tell you a quick story. i guess larry ellison asked rupert murdoch, tell me about television. he said, i can tell you everything you need to know in
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30 seconds. do you have time? and larry ellison said yes, and he said sports. that is it. that is the ultimate leverage. sports. rsn's. these are some of rupert's best work. when it became available, we said let's see what we can do. we have a great relationship with sinclair. >> you sold your first show to them. byron: i started my first from the table. when i sold my first television "entertainers with byron allen," he was one of my first buyers. we only had two stations, i think pittsburgh and baltimore. i called every television station from my dining room table and asked them to carry my once a week show for free. 14 minutes of commercial time, i will keep seven minutes, you get seven minutes, local station could you sell your seven minutes to local advertisers, and i will sell my seven minutes to national advertisers.
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>> you were alongside them in this deal. we know what sinclair -- the financing. how much are you guys invested? byron: what i did, i put in, personally, a small amount which i can't disclose. >> how small are we talking? $10 million, $100 million? byron: small is relative. right? i put in a small amount personally because allen media does have debt and we have investors in our debt and i would never invest capital of allen media in something we do not control 100%, so we love the idea. he loved the platform. i said, you know what? it doesn't fit the profile of allen media but i, personally, will do it. it is literally a personal investment. but allen media has to have a seat at the table in providing content to you, and they were like, "this is a great idea," and they immediately said, this is perfect. you have been providing content for us for over 25 years.
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so all the upside for allen media, none of the downside. and i have taken that personal risk, but allen media is something i own 100% of. obviously it is very key to me. when you have stakeholders in the form of debt, you want to be careful there, so we see enormous opportunity there to provide content, and whether it is the weather channel, which i bought last year -- i bought that from bain and blackstone and comcast. the weather channel is phenomenal. it is iconic. it is nine consecutive years, the most trusted news brand in america, and there is a lot we can do with a rather chanter -- with the weather channel and these rsn's. there's a lot we can do in terms of documentaries, biographies, and who knows? maybe even sports leagues. you never know. >> i'm trying to get my head around the unifying theme. you have some local television stations you bought on monday. you have the regional sports networks. byron: that is monday.
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>> obviously the weather channel last year. what is the concept for entertainment studios? where does this company go? byron: i have always said my goal is to build the biggest media company in the world. >> what does that mean? you mean in terms of market cap, viewers? byron: top line revenue, size, ebitda scale. , i've always made that clear. that is it, every day. >> ton the debt market? do what? >> do you think the market is there to do it, to roll up enough companies? byron: some of it is debt, some equity, some free cash flow. some is that you just have to be very clever in the moves you make in this chess game, but i started this company from the dining room table 26 years ago and i could barely pay my phone bill. i mean there were days they , turned off my phone. there were days i didn't eat. was calling tv i stations from a payphone. we just kept plugging away. finally, we kept selling show after show.
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we ended up with about 43 television shows and probably one of the largest lee private -- one of the largest privately held television libraries in the world and i was able to go to verizon and convince them to let me use my library to launch networks. we launched seven networks with them, then we bought our eighth network, the weather channel. and now we have a phenomenal , streaming service that we were able to capture in the weather channel purchase, local now, an local now is an amazing streaming service. emily: that was entertainment ceo and chair byron allen. coming up, when it comes to cyber warfare, the nsa is known for its dominant position around the globe, so then how did hackers steal its cyber tools and put them to nefarious use? we will discuss. to the publicding market this year, u.s. securities and exchange commission chair jay clayton breaks down the ipo requirements. this is bloomberg. ♪
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emily: this is "bloomberg technology." in 2017, a group of hackers leaked nsa cybersecurity tools onto the internet. tools were subsequently co-opted by nefarious groups and used in global malware attacks. member the ransomware attack that affected hundreds of thousands of computers in dozens of countries? it turns out a different group of hackers access to those nsa tools before that all went down. and they were put to use. this according to a new report released by a cybersecurity firm. a technicalwe have
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director of symantec and the bloomberg global executive editor. what exactly happened here? >> thanks for having us. found was that the tools ultimately used in 2017 had been previously used over a year prior in early 2016 by another group. why this is significant as we did not believe that those tools were used by anybody except the original authors of the tools, allegedly the nsa, by anybody, but this has completely debunked that theory. for the first time, we were able to see in reality and we had evidence to the fact that a tool that was purposed are created by one attacking group or one set of hackers was repurposed and reused by a completely different
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group originating from completely different side of the globe. emily: so this turned a group of dangerous hackers into a more dangerous group of hackers and there are other private security firms that are at your beating this to china. >> right. i think what this shows is the way that this has become a very global -- cybersecurity and cyber threats have very much become another weapon in countries' tools for espionage and obtaining trade secrets. it looks like different industries were targeted here. this underscores the way that technology is very much at the center of an arms race right now and who is ahead in really key areas of technological innovation. china versus the u.s. we are seeing it played out time and time again. 5g is the technology that comes to mind in ways that overtly the united states is telling other
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countries to be on its side when it comes to what kinds of technology they use. very underlso these the surface ways that this is being played out and it is through cybersecurity and cyber espionage. emily: i know symantec is not directly calling up china, though other private security companies are. why not? attribution or attribution to a specific group or country is not really the place where semantic finds symantec semantic -- finds itself. i think the last mile and attribution is the job of law-enforcement enforcement or public sector agencies. while we can somehow tell you that a person or at least a computer was used for an attack, there is no way for symantec, to
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tell you from a technological perspective, whether the person operating to the computer -- the computer belonged to agency a or b or whether the computer was being used to conduct a different attack. so, whoever is behind it, as i understand it, it was an nsa attack on their computers that enabled them to steal the tools and use them for their own ends. is that correct? vikram: that is correct. until now, it was very theoretical that if one attacker group attacked another. tje -- then somebody who was watching what was transpiring could repurpose those attack tools themselves. it is the first time we have been able to take that theoretical knowledge to provide a look at what is really
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happening. we have been able to prove that the only way that buckeye was able to repurpose these tools created and put out there by the shadow brokers was if they had or one of the networks at the receiving end that allow the shadow brokers themselves. so, this really puts out a new impact to the rest of the world which is a couple of things. that isy agency involved in offensive attacks will be looking at the wrong playbook and saying, if the adversaries can watch and can use these tools, what is our responsibility to our users? anything that we use might be used against our constituents as well. there is a whole debate going on about how we balance the
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offensive capabilities versus the defensive responsibilities that some of these government agencies have. tom: and i think it shows that u.s. industries and other industries are caught in the middle of this tug-of-war. he hits it right on the head. what is the u.s.'s responsibility to u.s. weustries when it comes to, found this being played out on your servers, in your systems, in your motherboards, whatever it is, how forthcoming can they be and how much information sharing does the u.s. want to have with u.s. industries? how much do u.s. industries want to share with the u.s. government? how much can they and should they and is appropriate for them to work together to combat this? emily: is this an indictment of the u.s. cyber defenses? at this point, can the nsa do anything? can a counterattack. can they get these tools back? , i don'ttarting
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believe this is an indictment of the nsa or any other national agency. national agencies have a mandate. they will use whatever tools are available from a legal perspective to them to achieve that mandate. on this discovery really ads to the existing mandate is another factor that they need to consider when they use some of the tools that they actually do. it changes the risk that some of the tools exposed their own constituents who they are trying to protect. there is no silver bullet out there because some of these attacks are perpetuated for national purposes, but at the same time, they have a responsibility of risk that is imperative. to your other question about can these tools be brought back, unfortunately what has been
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released publicly cannot be brought back. what can be done is another assessment before the next set of attacks take place with an understanding that the adversaries are watching, will learn how we can achieve both their purposes of the goals required or mandated by the itional mandate or what is that we can do to protect our end-users as well. emily: fascinating stuff what is happening out there in cyberspace. thank you. one ofg with hacking, the world's largest crypto exchanges says hackers stole 7000 bitcoin worth, about $40 million. the hackers. off the heist using a variety of techniques in a large-scale security breach. the exchange says it will use an emergency insurance fund to cover losses. it will cover a security review on all systems and data. coming up, volvo's electric car
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mass-market sedan. joining us to discuss is the polestar ceo. think so much for joining us. good to have you in the studio all the way from sweden. give is a broad view of your cars coming out on the market. you have a hybrid, a sedan, you have also promised an suv. >> yes, that is the hybrid, the polestar 1. the very exclusive collectors car. 500 we produce every year. that is really a very luxurious, exclusive sports car. all-star 2 -- pull star -- polestar 2 is a full electric car. $55,500 in the u.s. after federal taxes, so it is a competitive model for a powerful long-range car.
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i think specific for us and our designs, fewer, progressive design, that is what it stands for. i'm in town because of google io. we have android powered infotainment systems. emily: you are using the android automotive operating system. why did you choose google? it is for the benefit of our customers to have this incredible artificial intelligence of android google assistant. it is the smoothest way of integrating your digital life that you are used to into your car. you get google maps, you get the google place store, all of that is an amazing offer. emily: and you are opening a new r&d center in the u.k. what is the strategy? what a u.k.. especially given the political upheaval happening as a result of brexit?
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or the lack of brexit right now. thomas: well, that does not change the fact that they are great engineers and people who really know how to engineer sports cars that are lightweight, that will accelerate all the way to market, and obviously low-volume production. so, we think it is a brilliant addition to our company. emily: what do you have on tesla? is it fair to say you are coming for tesla? thomas: we are adding the offer into the market. i think it is an intriguing offer. with a company that is offering a great design, our android system. i think you can trust and rely on our promises, because we have the backbone of great parents who know how to produce cars. well, work with the
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supply chain when it comes to spare parts and stuff. i think there is a high trust in us delivering what we promise. emily: let's talk about your parents. volvo in the chinese carmaker. we are in the middle of a trade war between china and the u.s. how might that impact your plans in your production? is it something that you are preparing for? >> we have to prepare for that. our business plan is conservatively clan on the tariffs in place right now. our offer of $55,500 for the cost of the polestar 2 is based on the existing tariffs. as a company, we support free trade and we believe that is a benefit for the whole world. is difficult to figure out what is happening between the u.s. and china right now, but there are reports that the chinese are backtracking. you have president trump threatening tariffs as of friday.
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what would you like to see happen? how would you like to see this resolved? beyond my wishes and they really can only say that we look at the situation as it is. for what is in place right now. emily: all right, we will look for the cars to hit the market. thank you so much for stopping by. thomas: you're welcome. emily: as several tech companies had to the public market, they will be required to disclose financial records, including growth and losses. does reporting back kind of information discourage companies from going public? david rubenstein set down with the u.s. securities and exchange chair to talk about it. if i said the approach is the right approach, give us all the
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information when you are going public, should we have the same amount of disclosure for our largest companies? probably not. the mega global companies need to provide us with much more companies -- information than the start out dust startup bio companies. can we scale disclosure requirements that makes it more successful for media companies? david: if you are a publicly traded company, every quarter you file information with the sec. what about doing it every six months as opposed to every quarter? i know that has been debated. do you have a view on that? investorserly -- thirst for information, they want information on a regular basis. i don't expect the quarterly reporting will go away anytime soon. if you borrow money from a bank
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at the same time that you are selling stock, the bank is going to want quarterly information. i don't know many loan documents that have semiannual information. the real question for us is do you need to do something as extensive every quarter? as we require today? you know what happens? people take this quarterly report, the one filed in june, and they compare it to the march quarterly report. and all they really want to know is what is in the press release, the earnings press release, and what are the changes? yet, we make people file a very large document. we must be able to do something that is more streamlined on a quarterly basis. emily: sec chair jay clayton. you can catch the full interview on "the david rubenstein show." big pushad, apple's into india could come soon. details on mumbai next. this is bloomberg. ♪
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emily: apple's global retail push continues. bloomberg has learned that the iphone maker has zeroed in on several upscale sites in mumbai. apple has been blocked from opening its own stores in india because it does not meet local sourcing requirements. now it is moving manufacturing into the country. joining us to discuss is our bloomberg tech reporter. tell us about where things stand. >> for the past several years, apple has talked a big game in india. tim cook has visited there. he has met with all sorts of celebrities, actors and actresses, government leaders.
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they have opened up a development facility there. the reality of the situation is not so positive. they have pretty much completely failed in india and have 1% market share, if not a little bit more, little bit less in terms of smartphone, even though it is the fastest smart grown -- smartphone -- fastest-growing smartphone economy. they are looking to open up their first store in mumbai, a big and popular region, and they are hoping that could start to turn things around. emily: do we have any clues as to where specifically in mumbai apple is looking? mark: we are told it is going to be in major districts on par with fifth avenue in new york or the louvre area in paris. right now, they are still narrowing down a short list. i still think it will be sometime before the store actually opens to the public. emily: so, when was my next question, might we actually expect this to officially be open? mark: i would imagine sometime in 2020.
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right now, we are at the shortlist process. they will left to strike deals with the right people to actually build the store. they will have to go through a hiring process and building these complex stores, they take some time. all sorts of deals with the mall or other areas. it is a complex industry. i would say 2020 for their first store in india. they seem to be on pace for their targets. emily: india, like most developing markets, you have lower income, cheaper smartphone competitors. how well will apple compete in this market? isk: as of right now, apple a completely non-viable option in india. the consumers want phones that have really high technical features, they care about megapixels, they care about processor speed. care about bigger screens,
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but they wanted had a very low price point. the problem is that the iphone thatd the older iphones, pricing distilled two or three times the prices of competing of the other lower end devices in india. for apple to really compete at a mass-market level in india, they are going to need to bring phone prices down considerably. we have seen evidence they have been doing that in terms of lowering india prices recently specifically for the iphone xr, but i still think they still have a way to go. you listen to tim cook on the earnings calls. previous years, he sounded more optimistic about india. is last call, he said this not going to be a short-term success, this is a long-term play. the question is, how long term will it be until apple does find success there? emily: we have about 30 seconds left, could india become the next china for apple if they pull this off? is going tout this
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take 5-10 years before they have any real penetration in india. it is going to require a big ramp-up of retail stores. products and services geared toward the market in india. emily: all right. mark, thank you so much for your reporting on this. we will continue to follow. that does it for this edition of "bloomberg technology." we are always on twitter. follow our global breaking news network on twitter. this is bloomberg. ♪
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